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What changed in Kinder Morgan's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Kinder Morgan's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+284 added−254 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-08)

Top changes in Kinder Morgan's 2023 10-K

284 paragraphs added · 254 removed · 182 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

71 edited+14 added−14 removed140 unchanged
Biggest changeSee “ —Risks Related to Regulation—Climate-related risks and related regulation could result in significantly increased operating and capital costs for us and could reduce demand for our products and services. ” Our insurance policies do not cover all losses, costs or liabilities that we may experience, and insurance companies that currently insure companies in the energy industry may cease to do so or substantially increase premiums.
Biggest changeOur insurance policies do not cover all losses, costs or liabilities that we may experience, and insurance companies that currently insure companies in the energy industry may cease to do so or substantially increase premiums. Our insurance program may not cover all operational risks and costs and may not provide sufficient coverage in the event of a claim.
Adverse changes to the availability, terms and cost of capital, interest rates or our credit ratings (which would have a corresponding impact on the credit ratings of our subsidiaries that are party to the cross guarantee agreement) could cause our cost of doing business to increase by limiting our access to capital, including our ability to refinance maturities of existing indebtedness on similar terms, which could in turn reduce our cash flows, and could limit our ability to pursue acquisition or expansion opportunities.
Adverse changes to the availability, terms and cost of capital, interest rates or our credit ratings (which would have a corresponding impact on the credit ratings of our 30 subsidiaries that are party to the cross guarantee agreement) could cause our cost of doing business to increase by limiting our access to capital, including our ability to refinance maturities of existing indebtedness on similar terms, which could in turn reduce our cash flows, and could limit our ability to pursue acquisition or expansion opportunities.
In addition to environmental and pipeline safety matters, we are subject to regulations extending to such matters as (i) federal, state and local taxation; (ii) rates (which include reservation, commodity, surcharges, fuel and gas lost and unaccounted for), operating terms and conditions of service; (iii) the types of services we may offer to our customers; (iv) the contracts for service entered into with our customers; (v) the certification and construction of new facilities; (vi) the integrity, safety and security (including against cyber-attacks) of facilities and operations; (vii) the acquisition of other businesses; (viii) the acquisition, extension, disposition or abandonment of services or facilities; (ix) reporting and information posting requirements; (x) the maintenance of accounts and records; and (xi) relationships with affiliated companies involved in various aspects of the natural gas and energy businesses. 31 Should we fail to comply with any applicable statutes, rules, regulations, and orders of such regulatory authorities, we could be subject to substantial penalties and fines and potential loss of government contracts.
In addition to environmental and pipeline safety matters, we are subject to regulations extending to such matters as (i) federal, state and local taxation; (ii) rates (which include reservation, commodity, surcharges, fuel and gas lost and unaccounted for), operating terms and conditions of service; (iii) the types of services we may offer to our customers; (iv) the contracts for service entered into with our customers; (v) the certification and construction of new facilities; (vi) the integrity, safety and security (including against cyber-attacks) of facilities and operations; (vii) the acquisition of other businesses; (viii) the acquisition, extension, disposition or abandonment of services or facilities; (ix) reporting and information posting requirements; (x) the maintenance of accounts and records; and (xi) relationships with affiliated companies involved in various aspects of the natural gas and energy businesses. 32 Should we fail to comply with any applicable statutes, rules, regulations, and orders of such regulatory authorities, we could be subject to substantial penalties and fines and potential loss of government contracts.
See “—Financial distress experienced by our customers or other counterparties could have an adverse impact on us in the event they are unable to pay us for the products or services we provide or otherwise fulfill their obligations to us.” In addition, decreases in the prices of crude oil, NGL and natural gas are likely to have a negative impact on our operating results and cash flow.
See “ —Financial distress experienced by our customers or other counterparties could have an adverse impact on us in the event they are unable to pay us for the products or services we provide or otherwise fulfill their obligations to us. ” In addition, decreases in the prices of crude oil, NGL and natural gas are likely to have a negative impact on 25 our operating results and cash flow.
Negative impacts from a compromised reputation or changes in public opinion (including with respect to the production, transportation and use of hydrocarbons generally) could include increased regulatory oversight, difficulty obtaining rights-of-way and delays in obtaining, or challenges to, regulatory approvals with respect to growth projects, blockades, project cancellations, difficulty securing financing, revenue loss, reduction in customer base, and decreased value of our securities and our business.
Negative impacts from a compromised reputation or changes in public opinion (including with respect to the production, transportation and use of hydrocarbons generally) could include increased regulatory oversight and costs, difficulty obtaining rights-of-way and delays in obtaining, or challenges to, regulatory approvals with respect to growth projects, blockades, project cancellations, difficulty securing financing, revenue loss, reduction in customer base, and decreased value of our securities and our business.
If our board of directors elects to pay dividends at the anticipated level and that action would leave us with insufficient cash to take timely advantage of growth opportunities (including through acquisitions), to meet any large unanticipated liquidity requirements, to fund our operations, to maintain our leverage metrics or otherwise to properly address our business prospects, our business could be harmed.
If our Board elects to pay dividends at the anticipated level and that action would leave us with insufficient cash to take timely advantage of growth opportunities (including through acquisitions), to meet any large unanticipated liquidity requirements, to fund our operations, to maintain our leverage metrics or otherwise to properly address our business prospects, our business could be harmed.
For example, the Federal Clean Air Act and other similar federal and state laws are subject to periodic review and amendment, which could result in more stringent emission control requirements obligating us to make significant capital expenditures at our facilities. Several state and federal agencies have also increased their daily and maximum penalty amounts in recent years.
For example, the Federal Clean Air Act and other similar federal and state laws and regulations are subject to periodic review and amendment, which could result in more stringent emission control requirements obligating us to make significant capital expenditures at our facilities. Several state and federal agencies have also increased their daily and maximum penalty amounts in recent years.
Potential targets include our pipeline systems, terminals, processing plants, databases or operating systems. The occurrence of an attack could cause a substantial decrease in revenues and cash flows, increased costs to respond or other financial loss, significant reporting requirements, damage to our reputation, increased regulation or litigation or inaccurate information reported from our operations.
Potential targets include our pipeline systems, terminals, processing plants, databases or operating systems. The occurrence of an attack could cause a substantial decrease in revenues and cash flows, increased costs to respond 27 or other financial loss, significant reporting requirements, damage to our reputation, increased regulation or litigation or inaccurate information reported from our operations.
Without successful development activities, the reserves, revenues and cash flows of the oil and gas producing assets within our CO 2 business segment will decline. We may not be able to develop or acquire additional reserves at an acceptable cost or have necessary financing for these activities in the future.
Without successful development activities, the reserves, revenues and cash flows of the oil and gas producing assets within our CO 2 business segment will decline. We may not be able to develop or acquire additional reserves at an acceptable cost or have necessary 29 financing for these activities in the future.
Some of the agreements governing our debt generally require us to comply with various affirmative and negative covenants, including the maintenance of certain financial ratios and restrictions on (i) incurring 30 additional debt; (ii) entering into mergers, consolidations and sales of assets; (iii) granting liens; and (iv) entering into sale-leaseback transactions.
Some of the agreements governing our debt generally require us to comply with various affirmative and negative covenants, including the maintenance of certain financial ratios and restrictions on (i) incurring additional debt; (ii) entering into mergers, consolidations and sales of assets; (iii) granting liens; and (iv) entering into sale-leaseback transactions.
Risks Related to Operating our Business Our businesses are dependent on the supply of and demand for the products we handle. Our pipelines, terminals and other assets and facilities, including the availability of expansion opportunities, depend in part on continued production of natural gas, crude oil and other products in the geographic areas that they serve.
Risks Related to our Business Our businesses are dependent on the supply of and demand for the products we handle. Our pipelines, terminals and other assets and facilities, including the availability of expansion opportunities, depend in part on continued production of natural gas, crude oil and other products in the geographic areas that they serve.
These hedging arrangements expose us to risk of financial loss in some circumstances, including when production is less than expected, when the counterparty to the hedging contract defaults on its contract obligations, or when there is a change in the expected differential between the underlying price in the hedging agreement and the actual price received.
These hedging arrangements expose us to risk of financial loss in some circumstances, including when production is less than expected, when the counterparty to the hedging contract defaults on its contract obligations, or when there is a change in the expected differential between the underlying price in the hedging 26 agreement and the actual price received.
For more information about climate change regulation, see Items 1 and 2. “ Business and Properties—Narrative Description of Business—Environmental Matters—Climate Change. ” Adoption of any such laws or regulations could increase our costs to operate and maintain our facilities, expand existing facilities or construct new facilities.
For more information about climate change regulation, see Items 1 and 2. “ Business and Properties—Narrative Description of Business—Environmental Matters—Climate Change. ” 34 Adoption of any such laws or regulations could increase our costs to operate and maintain our facilities, expand existing facilities or construct new facilities.
In addition, the consequences of any operational incident (including as a result of adverse sea conditions) at one of our marine terminals may be 24 even more significant as a result of the complexities involved in addressing leaks and releases occurring in the ocean or along coastlines and/or the repair of marine terminals.
In addition, the consequences of any operational incident (including as a result of adverse sea conditions) at one of our marine terminals may be even more significant as a result of the complexities involved in addressing leaks and releases occurring in the ocean or along coastlines and/or the repair of marine terminals.
Conversely, a decision to address such needs might lead to the payment of dividends below the anticipated levels. As events present themselves or become reasonably foreseeable, our board of directors, which determines our business strategy and our dividends, may decide to address those matters by reducing our anticipated dividends.
Conversely, a decision to address such business needs might lead to the payment of dividends below the anticipated levels. As events present themselves or become reasonably foreseeable, our Board which determines our business strategy and our dividends, may decide to address those matters by reducing our anticipated dividends.
When we engage in hedging transactions (for example, to mitigate our exposure to fluctuations in commodity prices or currency exchange rates or to balance our exposure to fixed and variable interest rates) that are effective economically, these transactions may not be considered effective for accounting purposes.
When we engage in hedging transactions (for example, to mitigate our exposure to fluctuations in commodity prices or currency exchange rates or to balance our exposure to fixed and variable interest rates) that we believe are effective economically, these transactions may not be considered effective for accounting purposes.
Some shippers on our pipelines have filed complaints with the regulators seeking prospective reductions in the tariff rates and, in the case of a protest to a rate filing, seeking substantial refunds for alleged overcharges during the years in question.
Some shippers on our pipelines have filed complaints with the regulators seeking prospective reductions in the tariff rates and, in the 31 case of a protest to a rate filing, seeking substantial refunds for alleged overcharges during the years in question.
Accordingly, our consolidated financial statements may reflect some volatility due to these hedges, even when there is no underlying economic impact at the dates of those consolidated financial statements.
Accordingly, our consolidated financial statements may reflect volatility due to these hedges, even when there is no underlying economic impact at the dates of those consolidated financial statements.
Our ability to begin and complete expansion and new-build projects may be inhibited by difficulties in obtaining permits and rights-of-way, public opposition, increases in costs of construction materials, cost overruns, inclement weather and other delays. Should we pursue projects through joint ventures with others, we will share control of and any benefits from those projects.
Our ability to begin and complete expansion and new-build projects may be inhibited by difficulties in obtaining permits and rights-of-way, public opposition, increases in costs of construction materials, cost overruns, inclement weather and other delays. If we pursue projects through joint ventures with others, we will share control of and any benefits from those projects.
For example, following the commodity price declines we experienced due to COVID-19 during the first half of 2020, we recorded a combined $1.950 billion of non-cash impairments associated with our Natural Gas Pipelines Non-Regulated and CO 2 reporting units, primarily for impairments of goodwill and assets owned in these businesses.
For example, following the commodity price declines we experienced due to COVID-19 during the first half of 2020, we recorded a combined $1.95 billion of non-cash impairments associated with our Natural Gas Pipelines Non-Regulated and CO 2 reporting units, primarily for impairments of goodwill and assets owned in these businesses.
The occurrence of any of these risks could result in serious injury and loss of human life, significant damage to property and natural resources, environmental pollution, significant reputational damage, impairment or suspension of operations, fines or other regulatory penalties, costs associated with responding to an investigation or enforcement action brought by a governmental agency, and revocation of regulatory approvals or imposition of new requirements, any of which also could result in substantial financial losses, including lost revenue and cash flow to the extent that an incident causes an interruption of service.
The occurrence of any of these risks could result in serious injury and loss of human life, significant damage to property and natural resources, environmental pollution, significant reputational damage, impairment or suspension of operations, fines or other regulatory penalties, costs associated with allegations of criminal liability, costs associated with responding to an investigation or enforcement action brought by a governmental agency, and revocation of regulatory approvals or imposition of new requirements, any of which also could result in substantial financial losses, including lost revenue and cash flow to the extent that an incident causes an interruption of service.
Insurance companies may reduce the insurance capacity 27 they are willing to offer or may demand significantly higher premiums or deductibles to cover our assets. If significant changes in the number or financial solvency of insurance underwriters for the energy industry occur, we may be unable to obtain and maintain adequate insurance at a reasonable cost.
Insurance companies may reduce or eliminate the insurance capacity they are willing to offer or may demand significantly higher premiums or deductibles to cover our assets. If significant changes in the number or financial solvency of insurance underwriters for the energy industry occur, we may be unable to obtain and maintain adequate insurance at a reasonable cost.
The unavailability of full insurance coverage to cover events in which we suffer significant losses could have a material adverse effect on our business, financial condition and results of operations. Expanding our existing assets and constructing new assets is part of our growth strategy.
The unavailability of adequate insurance coverage to cover events in which we suffer significant losses could have a material adverse effect on our business, financial condition and results of operations. Expanding our existing assets and constructing new assets is part of our growth strategy.
Pipeline safety regulations or changes to such regulations may require additional leak detection, reporting, the replacement of some of our pipeline segments, addition of monitoring equipment and more frequent monitoring, inspection or testing of our pipeline facilities. Repair, remediation, and preventative or mitigating actions may require significant capital and operating expenditures.
Pipeline safety regulations or changes to such regulations may require additional leak detection, reporting, the replacement of certain pipeline segments, addition of monitoring equipment and more frequent monitoring, inspection or testing of our pipeline facilities. Repair, remediation, and preventative or mitigating actions may require significant capital and operating expenditures.
While we have taken additional steps to secure our networks and systems to specifically respond to new and elevated risks associated with recent increases in remote work, we may nevertheless be more vulnerable to a successful cyber-attack or information security incident when significant numbers of our employees are working remotely.
While we have taken additional steps to secure our networks and systems to specifically respond to new and elevated risks associated with remote work, we may nevertheless be more vulnerable to a successful cyber-attack or information security incident when significant numbers of our employees are working remotely.
Each of the foregoing could negatively impact our business directly, as well as our shippers and other customers, which in turn could negatively impact our prospects for new contracts for transportation, terminaling or other midstream services, or renewals of existing contracts or the ability of our customers and shippers to honor their contractual commitments.
Each of the foregoing supply and demand issues could negatively impact our business directly, as well as our shippers and other customers, which in turn could negatively impact our prospects for new contracts for transportation, terminaling or other midstream services, or renewals of existing contracts or the ability of our customers and shippers to honor their contractual commitments.
Many of our counterparties finance their activities through cash flow from operations or debt or equity financing, and some of them may be highly leveraged and may not be able to access additional capital to sustain their operations in the future.
Many of our counterparties finance their activities through cash flow from operations or debt or equity financing, and some of them may be highly leveraged and unable to access additional capital to sustain their operations in the future.
Such laws or regulations could also lead to reduced demand for hydrocarbon products that are deemed to contribute to GHGs, or restrictions 33 on their use, which in turn could adversely affect demand for our products and services.
Such laws or regulations could also lead to reduced demand for hydrocarbon products that are deemed to contribute to emissions of GHGs, or restrictions on their use, which in turn could adversely affect demand for our products and services.
In addition, market events specific to us could result in the deterioration of our reputation with key stakeholders. 25 Reputational risk cannot be managed in isolation from other forms of risk. Credit, market, operational, insurance, regulatory and legal risks, among others, must all be managed effectively to safeguard our reputation.
In addition, events specific to us could result in the deterioration of our reputation with key stakeholders. We believe that reputational risk cannot be managed in isolation from other forms of risk and that credit, market, operational, insurance, regulatory and legal risks, among others, must all be managed effectively to safeguard our reputation.
Risks Related to Financing Our Business Our substantial debt could adversely affect our financial health and make us more vulnerable to adverse economic conditions. As of December 31, 2022, we had approximately $31.7 billion of consolidated debt (excluding debt fair value adjustments).
Risks Related to Financing Our Business Our substantial debt could adversely affect our financial health and make us more vulnerable to adverse economic conditions. As of December 31, 2023, we had approximately $31.9 billion of consolidated debt (excluding debt fair value adjustments).
Recently, the federal government has deprioritized onshore leasing and its review of applications for permits to drill. Third-party interests groups and members of the oil and gas industry have initiated litigation challenging decisions to approve or prohibit oil and gas activities on federally managed lands.
Since 2021, the federal government has deprioritized onshore leasing and its review of applications for permits to drill. Third-party interest groups and members of the oil and gas industry have initiated litigation challenging decisions to approve or prohibit oil and gas activities on federally managed lands.
The revenues, cash flows, profitability and future growth of some of our businesses (and the carrying values of certain of their respective assets, which include related goodwill) depend to a large degree on prevailing crude oil, NGL and natural gas prices.
The volatility of crude oil, NGL and natural gas prices could adversely affect our business. The revenues, cash flows, profitability and future growth of some of our businesses (and the carrying values of certain of their respective assets, which include related goodwill) depend to a large degree on prevailing crude oil, NGL and natural gas prices.
Our business also depends in part on the levels of demand for natural gas, crude oil, NGL, refined petroleum products, CO 2 , steel, chemicals and other products in the geographic areas to which our pipelines, terminals, shipping vessels and other facilities deliver or provide service, and the ability and willingness of our shippers and other customers to supply such demand.
Our business also depends in part on the levels of demand for natural gas, crude oil, NGL, refined petroleum products, CO 2 , steel, chemicals and other products in the geographic areas to which our pipelines, terminals, shipping vessels and other facilities deliver or provide service, and the ability and willingness of our shippers and other customers to supply such demand. 23 Decreases in the supply of or demand for natural gas, crude oil and other products could adversely impact the utilization of our assets.
Acquisition and development decisions generally are based on subjective judgments and assumptions that, while they may be reasonable, are by their nature speculative. It is impossible to predict with certainty the production potential of a particular property or well. Furthermore, the successful completion of a well does not ensure a profitable return on the investment.
Acquisition and development decisions related to oil and gas properties include subjective judgments and assumptions that, while they may be reasonable, are by their nature speculative. It is impossible to predict with certainty the production potential of a particular property or well. Furthermore, the successful completion of a well does not ensure a profitable return on the investment.
“ Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk. ” Our debt instruments may limit our financial flexibility and increase our financing costs. The instruments governing our debt contain restrictive covenants that may prevent us from engaging in certain transactions that may be beneficial to us.
For more information about our interest rate risk, see Item 7A. “ Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk. ” Our debt instruments may limit our financial flexibility and increase our financing costs. The instruments governing our debt contain restrictive covenants that may prevent us from engaging in certain transactions that may be beneficial to us.
Further, additional laws and regulations that may be enacted in the future or a new interpretation of existing laws and regulations could significantly increase the amount of these expenditures.
Further, additional laws and regulations that may be enacted in the future or a new interpretation of existing laws and regulations could significantly increase our compliance expenditures.
For example, in November 2021, the EPA proposed a rule containing standards of performance for GHG emissions, in the form of methane limitations, and volatile organic compound emissions for crude oil and natural gas sources, including the production, processing, transmission and storage segments.
For example, in December 2023, the EPA finalized a rule containing standards of performance for GHG emissions, in the form of methane limitations, and volatile organic compound emissions for crude oil and natural gas sources, including the production, processing, and transmission and storage segments.
Moreover, governmental agencies have responded to environmental justice concerns by imposing greater scrutiny in permitting approvals and enforcement actions that could exacerbate such negative impacts. Our use of hedging arrangements does not eliminate our exposure to commodity price risks and could result in financial losses or volatility in our income.
Moreover, governmental agencies have responded to environmental justice concerns by imposing greater scrutiny in the permit approval process and enforcement actions that could exacerbate the negative reputational impacts. Our use of hedging arrangements does not eliminate our exposure to commodity price risks and could result in financial losses or volatility in our income.
To the extent then-existing underlying market conditions are unfavorable, new hedging arrangements available to us will reflect such unfavorable conditions, limiting our ability to hedge our exposure to unfavorable commodity prices.
To the extent then-existing underlying market conditions are unfavorable, new hedging arrangements available to us will reflect such unfavorable conditions, limiting our ability to hedge our exposure to commodity prices on terms that are economically favorable to us.
We plan to continue our integrity testing programs to assess and maintain the integrity of our existing and future pipelines as required by PHMSA rules.
We plan to continue our integrity management program to assess and maintain the integrity of our existing and future pipelines as required by PHMSA rules.
“ Quantitative and Qualitative Disclosures About Market Risk .” Commodity transportation and storage activities involve numerous risks that may result in accidents or otherwise adversely affect our operations.
For more information about our energy and commodity market risk, see Item 7A. “ Quantitative and Qualitative Disclosures About Market Risk .” Commodity transportation and storage activities involve numerous risks that may result in accidents or otherwise adversely affect our operations.
Technological advances in in-line inspection tools, identification of additional threats to a pipeline’s integrity and changes to the amount of pipeline determined to be located in HCAs or MCAs can have a significant impact on integrity testing and repair costs.
The majority of compliance costs relate to pipeline integrity management regulations, which include assessment and repair requirements. Technological advances in in-line inspection tools, identification of additional threats to a pipeline’s integrity and changes to the amount of pipeline determined to be located in HCAs or MCAs can have a significant impact on integrity testing and repair costs.
This level of consolidated debt and the cross guarantee agreement could have important consequences, such as (i) limiting our ability to obtain additional financing to fund our working capital, capital expenditures, debt service requirements or potential growth, or for other purposes; (ii) increasing the cost of our future borrowings; (iii) limiting our ability to use operating cash flow in other areas of our business or to pay dividends because we must dedicate a substantial portion of these funds to make payments on our debt; (iv) placing us at a competitive disadvantage compared to competitors with less debt; and (v) increasing our vulnerability to adverse economic and industry conditions. 29 Our ability to service our consolidated debt, and our ability to meet our consolidated leverage targets, will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control.
This level of consolidated debt and the cross guarantee agreement could have important consequences, such as (i) limiting our ability to obtain additional financing to fund our working capital, capital expenditures, debt service requirements or potential growth, or for other purposes; (ii) increasing the cost of our future borrowings; (iii) limiting our ability to use operating cash flow in other areas of our business or to pay dividends because we must dedicate a substantial portion of these funds to make payments on our debt; (iv) placing us at a competitive disadvantage compared to competitors with less debt; and (v) increasing our vulnerability to adverse economic and industry conditions.
In addition, the redemption provisions might have the effect of impeding or discouraging a merger, tender offer or proxy contest by a non-U.S. citizen, even if it were favorable to the interests of some or all of our stockholders. Item 1B. Unresolved Staff Comments. None. Item 3. Legal Proceedings. See Note 18 “Litigation and Environmental” to our consolidated financial statements.
In addition, the redemption provisions might have the effect of impeding or discouraging a merger, tender offer or proxy contest by a non-U.S. citizen, even if it were favorable to the interests of some or all of our stockholders. Item 1B. Unresolved Staff Comments. None.
As of December 31, 2022, approximately $6.3 billion of our approximately $31.7 billion of consolidated debt (excluding debt fair value adjustments) was subject to variable interest rates, either as short-term or long-term variable-rate debt obligations, or as long-term fixed-rate debt effectively converted to variable rates through the use of interest rate swaps.
As of December 31, 2023, approximately $8.3 billion of our approximately $31.9 billion of consolidated debt (excluding debt fair value adjustments) was subject to variable interest rates, either as short-term or long-term variable-rate debt obligations, or as long-term fixed-rate debt effectively converted to variable rates through the use of interest rate swaps. In response to increasing inflation, the U.S.
Hurricanes, earthquakes, flooding and other natural disasters, as well as subsidence and coastal erosion and climate-related physical risks, could have an adverse effect on our business, financial condition and results of operations.
Technology failures or incidents of misuse could result in significant adverse effects on our operations, results of operations, financial condition and cash flows. Hurricanes, earthquakes, flooding and other natural disasters, as well as subsidence and coastal erosion and climate-related physical risks, could have an adverse effect on our business, financial condition and results of operations.
We cannot predict the impact of future economic conditions, fuel conservation measures, alternative fuel requirements, governmental regulation or technological advances in fuel economy and energy generation devices, all of which could reduce the production of and/or demand for the products we handle. We face competition from other pipelines and terminals, as well as other forms of transportation and storage.
We cannot predict the impact of future economic conditions, fuel conservation measures, alternative fuel requirements, governmental regulation and/or tax incentives or technological advances in fuel economy and energy generation devices, all of which could reduce the production of and/or demand for the products we handle.
Regulatory authorities may modify their permitting policies in ways that disadvantage our construction projects, such as the FERC’s ongoing evaluation of its process for reviewing and approving applications for construction of natural gas infrastructure, including consideration of changes to its Certificate Policy Statement and its issuance of a Draft GHG Policy Statement.
Regulatory authorities may modify their permitting policies in ways that disadvantage our construction projects, such as the FERC’s ongoing evaluation of its process 28 for reviewing and approving applications for construction of natural gas infrastructure.
Risks Related to Ownership of Our Capital Stock The guidance we provide for our anticipated dividends is based on estimates. Circumstances may arise that lead to conflicts between using funds to pay anticipated dividends or to invest in our business. We disclose in this report and elsewhere the expected cash dividends on our common stock.
Circumstances may arise that lead to conflicts between using funds to pay anticipated dividends or to invest in our business. We disclose in this report and elsewhere the anticipated cash dividends on our common stock.
The potential for an attack may subject our operations to increased risks and costs, and, depending on their ultimate magnitude, have a material adverse effect on our business, results of operations, financial condition and/or business reputation.
The potential for an attack may subject our operations to increased risks and costs, and, depending on their ultimate magnitude, have a material adverse effect on our business, results of operations, financial condition and/or business reputation. Development of new technologies could create additional risk, or we may not have sufficient resources to manage our technology.
For example, PHMSA is working on a number of proposed rulemakings projected for publication in 2023, including those related to (i) pipeline leak detection and repair; (ii) updating regulations for LNG facilities; (iii) inspection and maintenance requirements for idled pipelines; and (iv) revising existing requirements for transportation of CO 2 in the liquid phase as well as establishing regulation of the transportation of gaseous CO 2 (projected in 2024).
In addition, PHMSA is working on a number of proposed rulemakings that are now projected for publication in 2024, including those related to (i) updating regulations for LNG facilities; (ii) requirements for idled gas and liquid pipelines; (iii) revising requirements for transportation of CO 2 in the liquid phase as well as establishing regulation of the transportation of gaseous CO 2 ; and (iv) requirements for responding to changes in class location for gas pipelines.
New or revised regulations that result in increased compliance costs or additional operating restrictions, particularly if those costs are not fully recoverable from our customers, as well as increased penalty amounts for inadvertent non-compliance, 32 such as a pipeline leak, could have a material adverse effect on our business, financial position, results of operations and prospects.
There can be no assurance as to the amount or timing of future expenditures for environmental compliance or remediation, and actual future expenditures may be different from the amounts we currently anticipate. 33 New or revised regulations that result in increased compliance costs or additional operating restrictions, particularly if those costs are not fully recoverable from our customers, as well as increased penalty amounts for inadvertent non-compliance, such as a pipeline leak, could have a material adverse effect on our business, financial position, results of operations and prospects.
See Note 2 “Summary of Significant Accounting Policies —Allowance for Credit Losses ” in our consolidated financial statements. Furthermore, financially distressed customers might be forced to reduce or curtail their future use of our products and services, which also could have a material adverse effect on our results of operations, financial condition, and cash flows.
Furthermore, financially distressed customers might be forced to reduce or curtail their future use of our products and services, which also could have a material adverse effect on our results of operations, financial condition, and cash flows.
For more information, see Items 1 and 2. “ Business and Properties—Narrative Description of Business—Environmental Matters. ” Increased regulatory requirements relating to the safety and integrity of our pipelines may require us to incur significant capital and operating expense outlays to comply.
For more information, see Items 1 and 2. “ Business and Properties—Narrative Description of Business—Environmental Matters. ” Increased regulatory requirements relating to the safety and integrity of our pipelines may require us to incur significant capital and operating expenses. We are subject to extensive laws and regulations related to pipeline safety and integrity at the federal and state levels.
These types of proposals, if finalized, would affect our assets and operations indirectly, such as by increasing the costs associated with the production of natural gas and liquids that we transport, or directly, such as by increasing significantly our capital and operating costs associated with impacted equipment.
These types of rules and others that are currently proposed, if finalized, would affect our assets and operations indirectly, such as by increasing the costs associated with the production of natural gas and liquids that we transport, or directly, such as by increasing significantly our capital and operating costs associated with impacted equipment or subjecting us to the potential for regulatory penalties associated with the inability to comply with the rules in the timeframe allotted.
Such expenditures will vary depending on the number of repairs determined to be necessary as a result of integrity assessments and other testing. We expect to increase expenditures in the future to comply with PHMSA regulations.
Such expenditures will vary depending on the number of repairs determined to be necessary as a result of integrity assessments and other testing. We also anticipate incurring substantial costs associated with PHMSA’s requirements for reconfirming the maximum allowable operating pressure of certain gas pipelines. We expect to increase expenditures in the future to comply with PHMSA regulations.
The risk of a disruption or breach of our operational systems, or the compromise of the data processed in connection with our operations, has increased as attempted attacks, including acts of terrorism or cyber sabotage, have advanced in sophistication and number around the world. 26 If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them.
The risk of a disruption or breach of our operational systems, or the compromise of the data processed in connection with our operations, has increased as attempted attacks, including acts of terrorism or cyber sabotage, have advanced in sophistication and number around the world.
Losses in excess of our insurance coverage could have a material adverse effect on our business, financial condition and results of operations. Changes in the insurance markets subsequent to certain hurricanes and other natural disasters have made it more difficult and more expensive to obtain certain types of coverage.
Changes in the insurance markets subsequent to certain hurricanes and other natural disasters have made it more difficult and more expensive to obtain certain types of coverage.
As interest rates increase, the amount of cash required to service variable-rate debt also increases, as do our costs to refinance maturities of existing indebtedness, and our earnings and cash flows could be adversely affected. For more information about our interest rate risk, see Item 7A.
Federal Reserve raised interest rates in March 2022 for the first time in over three years and raised rates many more times since. As interest rates increase, the amount of cash required to service variable-rate debt also increases, as do our costs to refinance maturities of existing indebtedness, and our earnings and cash flows could be adversely affected.
We may also experience loss or corruption of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business and results of operations.
If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them. We may also experience loss or corruption of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business and results of operations.
The occurrence of an event that is not fully covered by insurance, or failure by one or more of our insurers to honor its coverage commitments for an insured event, could have a material adverse effect on our business, financial condition and results of operations.
The occurrence of an event that is not fully covered by insurance, or failure by one or more of our insurers to honor its coverage commitments for an insured event, could cause us to incur significant losses.
We cannot provide any assurance that we will be able to find complementary acquisition targets or complete such acquisitions, or achieve the desired results from any acquisitions we do complete.
We cannot provide any assurance that we will be able to find complementary acquisition targets or complete such acquisitions, or achieve the desired results from any acquisitions we do complete. Any acquired businesses or assets will be subject to many of the same risks as our existing businesses and may not achieve the levels of performance that we anticipate.
Please read “— Our use of hedging arrangements does not eliminate our exposure to commodity price risks and could result in financial losses or volatility in our income. ” In addition, wide fluctuations in commodity prices can impact the accuracy of assumptions used in our budgeting process.
Please read “— Our use of hedging arrangements does not eliminate our exposure to commodity price risks and could result in financial losses or volatility in our income. ” In addition, wide fluctuations in commodity prices can impact the accuracy of assumptions used in our budgeting process. 24 If commodity prices fall substantially or remain low for a sustained period and we are not sufficiently protected through hedging arrangements, we may be unable to realize a profit from these businesses and would operate at a loss.
Pipeline safety regulation has increased over time, including recent final gas and hazardous liquid regulations that we must timely implement, and existing obligations may increase with new proposed rules that are currently under consideration. Congress is set to reauthorize the Pipeline Safety Act in 2023, which could further expand PHMSA’s current rulemaking agenda and/or statutory authority in certain areas.
Pipeline safety regulation has increased over time, including recent revised gas and hazardous liquid regulations that we must timely implement, and existing obligations may increase with new proposed rules that are currently under consideration.
We are subject to extensive laws and regulations related to pipeline safety and integrity at the federal and state levels. There are, for example, regulations issued by PHMSA for pipeline operators in the areas of design, operations, integrity testing, repairs, qualification and training, emergency response, control room management, and public awareness.
There are, for example, regulations issued by PHMSA for pipeline operators in the areas of design, operations, maintenance, integrity management, qualification and training, emergency response, control room management, and public awareness. We expect the costs of compliance with these regulations, including integrity management rules, will continue to be substantial.
Competition is a factor affecting our existing businesses and our ability to secure new project opportunities.
We face competition from other pipelines and terminals, as well as other forms of transportation and storage. Competition is a factor affecting our existing businesses and our ability to secure new project opportunities.
Our insurance program may not cover all operational risks and costs and may not provide sufficient coverage in the event of a claim. We do not maintain insurance coverage against all potential losses and could suffer losses for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage.
We do not maintain insurance coverage against all potential losses and could suffer losses for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. Losses in excess of our insurance coverage could have a material adverse effect on our business, financial condition and results of operations.
In addition, to the 23 extent that companies pursuing development of carbon capture and sequestration technology are successful, they could compete with us for customers who purchase CO 2 for use in enhanced oil recovery operations. The volatility of crude oil, NGL and natural gas prices could adversely affect our business.
If capacity on our assets remains unused, our ability to re-contract for expiring capacity at favorable rates or otherwise retain existing customers could be impaired. In addition, to the extent that companies pursuing development of carbon capture and sequestration technology are successful, they could compete with us for customers who purchase CO 2 for use in enhanced oil recovery operations.
The timing, severity and location of these climate change impacts are not known with certainty, and these impacts are expected to manifest themselves over varying time horizons. In addition, we may experience increased insurance premiums and deductibles, or a decrease in available coverage, for our assets in areas subject to severe weather.
The timing, severity and location of these climate change impacts are not known with certainty, and these impacts are expected to manifest themselves over varying time horizons.
Our business could be adversely affected if the Jones Act were to be modified or repealed so as to permit foreign competition that is not subject to the same U.S. government imposed burdens. Proposed changes to U.S. federal, state, and local tax laws, if enacted, could have a material adverse effect on our business and profitability.
Our business could be adversely affected if the Jones Act were to be modified or repealed so as to permit foreign competition that is not subject to the same U.S. government imposed burdens. 35 Risks Related to Ownership of Our Capital Stock The guidance we provide for our anticipated dividends is based on estimates.
We have seen and may see further intensification of these trends if and to the extent that the Biden presidential administration succeeds in further enacting its energy and environmental policies.
We have seen and may see further intensification of these trends.
Removed
Decreases in the supply of or demand for natural gas, crude oil and other products could adversely impact the utilization of our assets.
Added
Custom or new technology (including potential generative artificial intelligence) that is heavily relied upon by us or our counterparties may not be maintained and updated appropriately due to resource restraints, or other factors, which could cause technology failures or give rise to additional operational or security risks.
Removed
If capacity on our assets remains unused, our ability to re-contract for expiring capacity at favorable rates or otherwise retain existing customers could be impaired.
Added
Generative artificial intelligence or other new technology could also create additional regulatory scrutiny and generate uncertainty around intellectual property ownership and/or licensing or use. Technology (including artificial intelligence) is also subject to intentional misuse (by criminals, terrorists or other bad actors).
Removed
If commodity prices fall substantially or remain low for a sustained period and we are not sufficiently protected through hedging arrangements, we may be unable to realize a profit from these businesses and would operate at a loss.
Added
We may not realize anticipated operating advantages and cost savings.
Removed
See Note 4 “Gains and Losses on Divestitures, Impairments and Other Write-downs” and Note 8 “Goodwill” to our consolidated financial statements for more information. For more information about our energy and commodity market risk, see Item 7A.
Added
Our ability to service our consolidated debt, and our ability to meet our consolidated leverage targets, will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control.
Removed
In either case, losses could exceed our insurance coverage and our business, financial condition and results of operations could be adversely affected, perhaps materially.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures. Except for one terminal facility that is in temporary idle status with the Mine Safety and Health Administration, we do not own or operate mines for which reporting requirements apply under the mine safety disclosure requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).
Biggest changeItem 4. Mine Safety Disclosures. Except for one terminal facility that is in temporary idle status with the Mine Safety and Health Administration, we do not own or operate mines for which reporting requirements apply under the mine safety disclosure requirements of the Dodd-Frank Act.
We have not received any specified health and safety violations, orders or citations, related assessments or legal actions, mining-related fatalities, or similar events requiring disclosure pursuant to the mine safety disclosure requirements of Dodd-Frank for the year ended December 31, 2022. 35 PART II
We have not received any specified health and safety violations, orders or citations, related assessments or legal actions, mining-related fatalities, or similar events requiring disclosure pursuant to the mine safety disclosure requirements of the Dodd-Frank Act for the year ended December 31, 2023. 38 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur Purchases of Our Class P Stock (During the quarter ended December 31, 2022) Settlement Period Total number of securities purchased(a) Average price paid per security(b) Total number of securities purchased as part of publicly announced plans(a) Maximum number (or approximate dollar value) of securities that may yet be purchased under the plans or programs(a) October 1 to October 31, 2022 2,056,189 $ 16.75 2,056,189 $ 1,057,284,126 November 1 to November 30, 2022 — — — 1,057,284,126 December 1 to December 31, 2022 — — — 1,057,284,126 Total 2,056,189 $ 16.75 2,056,189 $ 1,057,284,126 (a) On July 19, 2017, our board of directors approved a $2 billion common share buy-back program.
Biggest change“ Management’s Discussion and Analysis of Financial Condition and Results of Operations—General—2024 Dividends and Discretionary Capital .” Our Purchases of Our Class P Stock (During the quarter ended December 31, 2023) Settlement Period Total number of securities purchased(a) Average price paid per security(b) Total number of securities purchased as part of publicly announced plans(a) Approximate dollar value of securities that may yet be purchased under the plans or programs(a) October 1 to October 31, 2023 5,706,428 $ 16.41 5,706,428 $ 1,574,253,794 November 1 to November 30, 2023 2,386,705 16.26 2,386,705 1,535,434,677 December 1 to December 31, 2023 — — — 1,535,434,677 Total 8,093,133 $ 16.37 8,093,133 $ 1,535,434,677 (a) On July 19, 2017, our Board approved a $2 billion common share buy-back program.
For information on our equity compensation plans, see Note 10 “Share-based Compensation and Employee Benefits —Share-based Compensation ” to our consolidated financial statements.
For information on our equity compensation plans, see Note 10 “Share-based Compensation and Employee Benefits —Share-based Compensation ” to our consolidated financial statements. For information about our expectations regarding dividends, please see Item 7.
On January 18, 2023, our board of directors approved an increase in our share repurchase authorization to $3 billion from $2 billion, increasing the maximum dollar value of securities that may yet be purchased under the plan as of January 18, 2023 to $2.1 billion. A fter repurchase, the shares are canceled and no longer outstanding.
On January 18, 2023, our Board approved an increase in our share repurchase authorization to $3 billion from $2 billion. A fter repurchase, the shares are canceled and no longer outstanding. (b) Amount includes any commission or other costs to repurchase shares.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. As of February 7, 2023, we had 9,941 holders of our Class P common stock, which does not include beneficial owners whose shares are held by a nominee, such as a broker or bank.
Our Class P common stock is listed for trading on the NYSE under the symbol “KMI.” As of February 15, 2024, we had 9,540 holders of record of our Class P common stock, which does not include beneficial owners whose shares are held by a nominee, such as a broker or bank.
Removed
(b) Amount includes any commission or other costs to repurchase shares. Item 6. [Reserved]
Added
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Added
Subsequent to December 31, 2023 and through February 16, 2024, we repurchased less than 1 million shares at an average price of $16.50 for $7 million. Item 6. [Reserved]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations 36 General 37 Critical Accounting Estimates 37 Results of Operations 39 Overview 39 Consolidated Earnings Results (GAAP) 42 Non-GAAP Financial Measures 44 Segment Earnings Results 47 DD&A, General and Administrative and Corporate Charges, Interest, net and Noncontrolling Interests 56 Income Taxes 57 Liquidity and Capital Resources 57 General 57 KINDER MORGAN, INC.
Biggest changeItem 6. [Reserved] 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 39 General 40 Critical Accounting Estimates 40 Results of Operations 42 Overview 42 Consolidated Earnings Results 46 Non-GAAP Financial Measures 48 Segment Earnings Results 52 Liquidity and Capital Resources 58 General 58 Short-term Liquidity 59 KINDER MORGAN, INC.
Quantitative and Qualitative Disclosures About Market Risk 65 Energy Commodity Market Risk 65 Interest Rate Risk 66 Foreign Currency Risk 67 Item 8. Financial Statements and Supplementary Data 68 Index to Financial Statements 68
Quantitative and Qualitative Disclosures About Market Risk 67 Energy Commodity Market Risk 67 Interest Rate Risk 68 Foreign Currency Risk 69 Item 8. Financial Statements and Supplementary Data 70 Index to Financial Statements 70
AND SUBSIDIARIES (continued) TABLE OF CONTENTS Page Number Short-term Liquidity 58 Long-term Financing 59 Counterparty Creditworthiness 59 Capital Expenditures 59 Off Balance Sheet Arrangements 60 Contractual Obligations and Commercial Commitments 61 Cash Flows 62 Dividends and Stock Buy-back Program 63 Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries 64 Recent Accounting Pronouncements 65 Item 7A.
AND SUBSIDIARIES (continued) TABLE OF CONTENTS Page Number Long-term Financing 60 Capital Expenditures 60 Off Balance Sheet Arrangements 63 Contractual Obligations and Commercial Commitments 63 Cash Flows 64 Dividends and Stock Buy-back Program 65 Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries 66 Recent Accounting Pronouncements 67 Item 7A.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeBelow are the changes in Adjusted Segment EBDA between 2022 and 2021: Year Ended December 31, 2022 versus Year Ended December 31, 2021 2022 2021 Segment EBDA (GAAP) Certain Items Adjusted Segment EBDA Segment EBDA (GAAP) Certain Items Adjusted Segment EBDA Adjusted Segment EBDA increase/(decrease) (In millions) West Coast Refined Products $ 511 $ — $ 511 $ 448 $ 53 $ 501 $ 10 Southeast Refined Products 265 — 265 258 — 258 7 Crude and Condensate 331 — 331 358 — 358 (27) Total Products Pipelines $ 1,107 $ — $ 1,107 $ 1,064 $ 53 $ 1,117 $ (10) 50 Terminals Year Ended December 31, 2022 2021 (In millions, except operating statistics) Revenues $ 1,792 $ 1,715 Operating expenses (853) (793) Gain (loss) on divestitures and impairments, net 9 (36) Other income 5 4 Earnings from equity investments 14 15 Other, net 8 3 Segment EBDA 975 908 Certain Items(a) — 42 Adjusted Segment EBDA $ 975 $ 950 Change from prior period Increase/(Decrease) Segment EBDA $ 67 Adjusted Segment EBDA $ 25 Volumetric data(b) Liquids leasable capacity (MMBbl) 77.8 77.8 Liquids utilization %(c) 93.3 % 94.8 % Bulk transload tonnage (MMtons) 53.2 51.3 (a) For more detail of these Certain Items, see the discussion of changes in Segment EBDA below.
Biggest changeOur Crude and Condensate business also had lower revenues with a corresponding decrease in costs of sales, resulting primarily from decreased commodity pricing and volumes. • The $13 million (5%) increase in Southeast Refined Products was driven by (i) an increase in equity earnings from Products (SE) Pipe Line primarily due to increased revenues driven by higher rates, volumes and blending activities partially offset by unfavorable net changes in product gains and losses and (ii) higher revenues on Central Florida Pipeline LLC due to higher volumes and rates partially offset by lower earnings at our Transmix processing operations primarily due to unfavorable product pricing. • The $8 million (2%) increase in West Coast Refined Products was impacted by increased revenues from our Pacific operations as a result of renewable diesel growth projects and higher rates partially offset by higher operating costs driven by unfavorable net changes in product gains and losses, higher fuel rates, and increased labor costs and increased revenues from Calnev Pipe Line LLC driven by higher rates partially offset by a gain on sale of land in the 2022 period. 55 Terminals Year Ended December 31, 2023 2022 (In millions, except operating statistics) Revenues $ 1,917 $ 1,792 Costs of sales (33) (26) Other operating expenses (863) (827) Gain on divestitures and impairments, net 1 9 Other income 1 5 Earnings from equity investments 9 14 Other, net 8 8 Segment EBDA $ 1,040 $ 975 Change from prior period Increase/(Decrease) Segment EBDA $ 65 Volumetric data(a) Liquids leasable capacity (MMBbl) 78.7 78.2 Liquids utilization %(b) 93.6 % 91.3 % Bulk transload tonnage (MMtons) 53.3 53.2 (a) Volumes for facilities divested, idled, and/or held for sale are excluded for all periods presented.
Generally, our working capital balance varies due to factors such as the timing of scheduled debt payments, timing differences in the collection and payment of receivables and payables, the change in fair value of our derivative contracts, and changes in our cash and cash equivalent balances as a result of excess cash from operations after payments for investing and financing activities (discussed below in “ —Long-term Financing ” and “ —Capital Expenditures ”).
Generally, our working capital varies due to factors such as the timing of scheduled debt payments, timing differences in the collection and payment of receivables and payables, the change in fair value of our derivative contracts and changes in our cash and cash equivalent balances as a result of excess cash from operations after payments for investing and financing activities (discussed below in “ —Long-term Financing ” and “ —Capital Expenditures ”).
Fair value calculated for the purpose of testing our long-lived assets, including intangible assets, goodwill and equity method investments, for impairment involves the use of significant estimates and assumptions regarding the timing and amounts of future cash inflows and outflows, discount rates, market prices and asset lives, among other items.
Fair value calculated for the purpose of testing our long-lived assets, including intangible assets, goodwill and equity method investments, 40 for impairment involves the use of significant estimates and assumptions regarding the timing and amounts of future cash inflows and outflows, discount rates, market prices and asset lives, among other items.
Additional information regarding the nature and business purpose of our investments is included in Note 7 “Investments” to our consolidated financial statements. 60 Contractual Obligations and Commercial Commitments The table below provides a summary of our material cash requirements.
Additional information regarding the nature and business purpose of our investments is included in Note 7 “Investments” to our consolidated financial statements. Contractual Obligations and Commercial Commitments The table below provides a summary of our material cash requirements.
The classification of our capital expenditures as expansion capital expenditures or as sustaining capital expenditures is made consistent with our accounting policies and is generally a straightforward process, but in certain 59 circumstances can be a matter of management judgment and discretion.
The classification of our capital expenditures as expansion capital expenditures or as sustaining capital expenditures is made consistent with our accounting policies and is generally a straightforward process, but in certain circumstances can be a matter of management judgment and discretion.
Actual results may differ from the assumptions included in these calculations, and as a result, our estimates associated with our pension and OPEB can be, and have been revised in subsequent periods.
Actual results may differ from the assumptions included in these calculations, and as a result, our estimates associated with our pension and OPEB obligations can be, and have been revised in subsequent periods.
All of our senior notes issued to date, other than those issued by certain of our subsidiaries, generally have very similar terms, except for interest rates, maturity dates and prepayment premiums.
Our senior notes issued to date, other than those issued by certain of our subsidiaries, generally have very similar terms, except for interest rates, maturity dates and prepayment premiums.
Consequently, if dividends on our stock are not paid at the intended levels, our stockholders are not entitled to receive those payments in the future.
Our dividends are not cumulative. Consequently, if dividends on our stock are not paid at the intended levels, our stockholders are not entitled to receive those payments in the future.
(d) Represents the amount by which the benefit obligations exceeded the fair value of plan assets at year-end for pension and OPEB plans whose accumulated postretirement benefit obligations exceeded the fair value of plan assets. The payments by period include expected contributions in 2023 and estimated benefit payments for underfunded plans in the other years.
(d) Represents the amount by which the benefit obligations exceeded the fair value of plan assets at year-end for pension and OPEB plans whose accumulated postretirement benefit obligations exceeded the fair value of plan assets. The payments by period include expected contributions in 2024 and estimated benefit payments for underfunded plans in the other years.
Additional sections in this report which should be helpful to the reading of our discussion and analysis include the following: (i) a description of our business strategy found in Items 1 and 2. “ Business and Properties—Narrative Description of Business—Business Strategy; ” (ii) a description of developments during 2022, found in Items 1 and 2.
Additional sections in this report which should be helpful to the reading of our discussion and analysis include the following: (i) a description of our business strategy found in Items 1 and 2. “ Business and Properties—Narrative Description of Business—Business Strategy; ” (ii) a description of developments during 2023, found in Items 1 and 2.
(b) Interest payment obligations exclude adjustments for interest rate swap agreements and assume no change in variable interest rates from those in effect at December 31, 2022. (c) Represents commitments pursuant to the terms of operating lease agreements as of December 31, 2022.
(b) Interest payment obligations exclude adjustments for interest rate swap agreements and assume no change in variable interest rates from those in effect at December 31, 2023. (c) Represents commitments pursuant to the terms of operating lease agreements as of December 31, 2023.
Our dividends generally will be paid on or about the 15th day of each February, May, August and November. 63 Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries KMI and certain subsidiaries (Subsidiary Issuers) are issuers of certain debt securities.
Our dividends generally will be paid on or about the 15th day of each February, May, August and November. 65 Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries KMI and certain subsidiaries (Subsidiary Issuers) are issuers of certain debt securities.
The year-to-year decrease is discussed below in “ —Cash Flows—Operating Activities. ” We primarily rely on cash provided from operations to fund our operations as well as our debt service, sustaining capital expenditures, dividend payments, and our growth capital expenditures; however, we may access the debt capital markets from time to time to refinance our maturing long-term debt and finance incremental investments, if any.
The year-to-year increase is discussed below in “ —Cash Flows—Operating Activities. ” We primarily rely on cash provided by operations to fund our operations as well as our debt service, sustaining capital expenditures, dividend payments and our growth capital expenditures; however, we may access the debt capital markets from time to time to refinance our maturing long-term debt and finance incremental investments, if any.
“ Risk Factors; ” and (v) a discussion of forward-looking statements, found in “ Information Regarding Forward-Looking Statements ” at the beginning of this report. A comparative discussion of our 2021 to 2020 operating results can be found in Item 7.
“ Risk Factors; ” and (v) a discussion of forward-looking statements, found in “ Information Regarding Forward-Looking Statements ” at the beginning of this report. A comparative discussion of our 2022 to 2021 operating results can be found in Item 7.
For more information on our impairments and significant estimates and assumptions used in our impairment evaluations, see Note 4 “Gains and Losses on Divestitures, Impairments and Other Write-downs.” Environmental Matters With respect to our environmental exposure, we utilize both internal staff and external experts to assist us in identifying environmental issues and in estimating the costs and timing of remediation efforts.
For more information on our impairments and significant estimates and assumptions used in our impairment evaluations, see Note 4 “Losses and Gains on Divestitures, Impairments and Other Write-downs.” Environmental Matters With respect to our environmental exposure, we utilize both internal staff and external experts to assist us in identifying environmental issues and in estimating the costs and timing of remediation efforts.
These environmental liabilities are included within “Other current liabilities” and “Other long-term liabilities and deferred credits” in our consolidated balance sheet as of December 31, 2022.
These environmental liabilities are included within “Other current liabilities” and “Other long-term liabilities and deferred credits” in our consolidated balance sheet as of December 31, 2023.
Also, see Exhibit 10.14 to this Report “ Cross Guarantee Agreement, dated as of November 26, 2014, among KMI and certain of its subsidiaries, with schedules updated as of December 31, 2022. ” All significant intercompany items among the Obligated Group have been eliminated in the supplemental summarized combined financial information.
Also, see Exhibit 10.11 to this Report “ Cross Guarantee Agreement, dated as of November 26, 2014, among KMI and certain of its subsidiaries, with schedules updated as of December 31, 2023. ” All significant intercompany items among the Obligated Group have been eliminated in the supplemental summarized combined financial information.
For discussion on our hedging activities and related sensitivities to our estimates, see Note 14 “ Risk Management ” to our consolidated financial statements and Item 7A. “Quantitative and Qualitative Disclosures About Market Risk,” respectively. Impairments In addition to our annual testing of impairment for goodwill, we evaluate impairment of our long-lived assets when a triggering event occurs.
For discussion on our hedging activities and related sensitivities to our estimates, see Note 14 “Risk Management” to our consolidated financial statements and Item 7A. “ Quantitative and Qualitative Disclosures About Market Risk ,” respectively. Impairments In addition to our annual testing of impairment for goodwill, we evaluate impairment of our long-lived assets when a triggering event occurs.
(h) Represents commitments for the purchase of plant, property and equipment as of December 31, 2022. 61 Cash Flows The following table summarizes our net cash flows provided by (used in) operating, investing and financing activities between 2022 and 2021.
(h) Represents commitments for the purchase of plant, property and equipment as of December 31, 2023. 63 Cash Flows The following table summarizes our net cash flows provided by (used in) operating, investing and financing activities between 2023 and 2022.
As discussed further below, we believe our cash flows from operating activities, cash position and remaining borrowing capacity on our credit facilities are more than adequate to allow us to manage our day-to-day cash requirements and anticipated obligations.
As discussed further below, we believe our cash flows from operating activities, cash position and remaining borrowing capacity on our credit facility is more than adequate to allow us to manage our day-to-day cash requirements and anticipated obligations.
The loan commitments under our credit facilities can be used for working capital and other general corporate purposes and as a backup to our commercial paper program. Commercial paper borrowings reduce borrowings allowed under our credit facilities and letters of credit reduce borrowings allowed under our $3.5 billion credit facility.
The loan commitments under our credit facility can be used for working capital and other general corporate purposes and as a backup to our commercial paper program. Commercial paper borrowings and letters of credit reduce borrowings allowed under our credit facility.
(e) Primarily represents transportation agreements of $298 million, storage agreements for capacity of $159 million and NGL volume agreements of $155 million. (f) Primarily includes (i) rights-of-way obligations; and (ii) environmental liabilities related to sites that we own or have a contractual or legal obligation with a regulatory agency or property owner upon which we will perform remediation activities.
(e) Primarily represents transportation agreements of $310 million, storage agreements for capacity of $189 million and NGL volume agreements of $109 million. (f) Primarily includes (i) rights-of-way obligations; and (ii) environmental liabilities related to sites that we own or have a contractual or legal obligation with a regulatory agency or property owner upon which we will perform remediation activities.
(GAAP) to Adjusted EBITDA” below . 40 Amounts from Joint Ventures Certain Items, DCF and Adjusted EBITDA reflect amounts from unconsolidated joint ventures and consolidated joint ventures utilizing the same recognition and measurement methods used to record “Earnings from equity investments” and “Noncontrolling interests,” respectively.
Amounts from Joint Ventures Certain Items, DCF and Adjusted EBITDA reflect amounts from unconsolidated joint ventures and consolidated joint ventures utilizing the same recognition and measurement methods used to record “Earnings from equity investments” and “Noncontrolling interests,” respectively.
The expectations for 2023 discussed above involve risks, uncertainties and assumptions, and are not guarantees of performance. Many of the factors that will determine these expectations are beyond our ability to control or predict, and because of these uncertainties, it is advisable not to put undue reliance on any forward-looking statement. Please read our Item 1A.
The expectations for 2024 discussed above involve risks, uncertainties and assumptions, and are not guarantees of performance. Many of the factors that will determine these expectations are beyond our ability to control or predict, and because of these uncertainties, it is advisable not to put undue reliance on any forward-looking statement.
The classification has an impact on DCF because capital expenditures that are classified as expansion capital expenditures are not deducted from DCF, while those classified as sustaining capital expenditures are.
The classification has an impact on DCF because capital expenditures that are classified as expansion capital expenditures are not deducted in calculating DCF, while those classified as sustaining capital expenditures are.
We also include amounts from joint ventures for income taxes, DD&A and sustaining capital expenditures (see “Amounts from Joint Ventures” below).
We also adjust amounts from joint ventures for income taxes, DD&A, cash taxes and sustaining capital expenditures (see “Amounts from Joint Ventures” below).
We intend to fund our debt as it becomes due, primarily through credit facility borrowings, commercial paper borrowings, cash flows from operations, and/or issuing new long-term debt. Our short-term debt balance as of December 31, 2021 was $2,646 million.
We intend to fund our debt as it becomes due, primarily through credit facility borrowings, commercial paper borrowings, cash flows from operations, and/or issuing new long-term debt. Our short-term debt balance as of December 31, 2022 was $3,385 million.
We plan to increase our divide nd by 2% to $1 .13 per common share in 2023. On January 18, 2023, our board of directors approved an increase to our stock buy-back program from $2 billion to $3 billion.
We plan to increase our divide nd by 2% to $1 .15 per common share in 2024. On January 18, 2023, our Board approved an increase to our stock buy-back program from $2 billion to $3 billion.
S ince December 2017, in total, we have repurchased approximately 54 million shares of our Class P common stock under the program at an average price of approximately $17.40 per share for approximately $943 million, leaving a remaining capacity of $2.1 billion . For information on our equity buy-back program, see Note 11 “Stockholders’ Equity” to our consolidated financial statements.
S ince December 2017, in total, we have repurchased approximately 86 million shares of our Class P common stock under the program at an average price of $17.09 per share for $1,472 million, leaving a remaining capacity of approximately $1.5 billion . For information on our stock buy-back program, see Note 11 “Stockholders’ Equity” to our consolidated financial statements.
Excluding fair value adjustments, as of December 31, 2022 and 2021, the Obligated Group had $30,886 million and $31,608 million, respectively, of Guaranteed Notes outstanding.
Excluding fair value adjustments, as of December 31, 2023 and 2022, the Obligated Group had $31,167 million and $30,886 million, respectively, of Guaranteed Notes outstanding.
The income statement impact of the changes in the assumptions on our related benefit obligations are deferred and amortized into income over either the period of expected future service of active participants, or over the expected future lives of inactive plan participants. 38 The following sensitivity analysis shows the estimated impact of a 1% change in the primary assumptions used in our actuarial calculations associated with our pension and OPEB plans for the year ended December 31, 2022: Pension Benefits OPEB Net benefit cost (income) Change in funded status(a) Net benefit cost (income) Change in funded status(a) (In millions) One percent increase in: Discount rates $ (13) $ 145 $ — $ 13 Expected return on plan assets (22) — (4) — Rate of compensation increase 3 (9) — — One percent decrease in: Discount rates 15 (169) — (15) Expected return on plan assets 22 — 4 — Rate of compensation increase (3) 8 — — (a) Includes amounts deferred as either accumulated other comprehensive income (loss) or as a regulatory asset or liability for certain of our regulated operations.
The income statement impact of the changes in the assumptions on our related benefit obligations are deferred and amortized into income over either the period of expected future service of active participants, or over the expected future lives of inactive plan participants. 41 The following sensitivity analysis shows the estimated impact of a 1% change in the primary assumptions used in our actuarial calculations associated with our pension and OPEB plans for the year ended December 31, 2023: Pension Benefits OPEB Net benefit cost (credit) Funded status Net benefit cost (credit) Funded status(a) (In millions) One percent increase in: Discount rates $ (9) $ 133 $ — $ 10 Expected return on plan assets (17) — (3) — Rate of compensation increase 2 (10) — — One percent decrease in: Discount rates 11 (155) — (11) Expected return on plan assets 17 — 3 — Rate of compensation increase (2) 9 — — (a) Includes amounts deferred as either accumulated other comprehensive income (loss) or as a regulatory asset or liability for certain of our regulated operations.
(See “—Non-GAAP Financial Measures—Supplemental Information” below.) Although these amounts related to our unconsolidated joint ventures are included in the calculations of DCF and Adjusted EBITDA, such inclusion should not be understood to imply that we have control over the operations and resulting revenues, expenses or cash flows of such unconsolidated joint ventures.
(See “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to DCF” and “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted EBITDA” below.) Although these amounts related to our unconsolidated joint ventures are included in the calculations of DCF and Adjusted EBITDA, such inclusion should not be understood to imply that we have control over the operations and resulting revenues, expenses or cash flows of such unconsolidated joint ventures.
We provide for liquidity by maintaining a sizable amount of excess borrowing capacity under our credit facilities and, as previously discussed, have consistently generated strong cash flows from operations. As of December 31, 2022, our $3,385 million of short-term debt consisted primarily of senior notes that mature in the next twelve months.
We provide for liquidity by maintaining a sizable amount of excess borrowing capacity under our credit facility and, as previously discussed, have consistently generated strong cash flows from operations. As of December 31, 2023, our $4,049 million of short-term debt consisted primarily of commercial paper borrowings and senior notes that mature in the next twelve months.
(g) The $153 million in letters of credit outstanding as of December 31, 2022 consisted of the following (i) $54 million under six letters of credit for insurance purposes; (ii) a $46 million letter of credit supporting our International Marine Terminals Partnership Plaquemines Bond; (iii) a $24 million letter of credit supporting our Kinder Morgan Operating LLC “B” tax-exempt bonds; and (iv) a combined $30 million in twenty-nine letters of credit supporting environmental and other obligations of us and our subsidiaries.
(g) The $157 million in letters of credit outstanding as of December 31, 2023 consisted of the following (i) $51 million under six letters of credit for insurance purposes; (ii) a $46 million letter of credit supporting our International Marine Terminals Partnership Plaquemines Bond; (iii) a $24 million letter of credit supporting our Kinder Morgan Operating LLC “B” tax-exempt bonds; and (iv) a combined $36 million in thirty-four letters of credit supporting environmental and other obligations of us and our subsidiaries.
The actual amount of dividends to be paid on our capital stock will depend on many factors, including our financial condition and results of operations, liquidity requirements, business prospects, capital requirements, legal, regulatory and contractual constraints, tax laws, Delaware laws and other factors. See Item 1A. “ Risk Factors—The guidance we provide for our anticipated dividends is based on estimates.
The actual amount of dividends to be paid on our capital stock will depend on many factors, including our financial condition and results of operations, liquidity requirements, business prospects, capital requirements, legal, regulatory and contractual constraints, tax laws, Delaware laws and other factors. See Item 1A.
The calculations of DCF and Adjusted EBITDA related to our unconsolidated and consolidated joint ventures include the same items (DD&A and income tax expense, and for DCF only, also cash taxes and sustaining capital expenditures) with respect to the joint ventures as those included in the calculations of DCF and Adjusted EBITDA for our wholly-owned consolidated subsidiaries.
The calculations of DCF and Adjusted EBITDA related to our unconsolidated and consolidated joint ventures include the same items (DD&A and income tax expense, and for DCF only, also cash taxes and sustaining capital expenditures) with respect to the joint ventures as those included in the calculations of DCF and Adjusted EBITDA for our wholly-owned consolidated subsidiaries; further, we remove the portion of these adjustments attributable to 44 non-controlling interests.
We have consistently generated substantial cash flow from operations, providing a source of funds of $4,967 million and $5,708 million in 2022 and 2021, respectively.
We have consistently generated substantial cash flow from operations, providing a source of funds of $6,491 million and $4,967 million in 2023 and 2022, respectively.
DCF DCF is calculated by adjusting Net income attributable to Kinder Morgan, Inc. for Certain Items (Adjusted Earnings), and further by DD&A and amortization of excess cost of equity investments, income tax expense, cash taxes, sustaining capital expenditures and other items.
See “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted Net Income Attributable to Common Stock” below. DCF DCF is calculated by adjusting Net income attributable to Kinder Morgan, Inc. for Certain Items, and further for DD&A and amortization of excess cost of equity investments, income tax expense, cash taxes, sustaining capital expenditures and other items.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations ” included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 7, 2022. 36 General Significant Acquisitions and Dispositions Following are significant acquisitions and dispositions during the reporting periods.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations ” included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 7, 2022. 39 General Acquisitions Following are acquisitions we made during the reporting period. See Note 3.
As of December 31, 2022 and 2021, approximately 20 % a nd 21%, respectively, of the principal amount of our debt balances were subject to variable interest rates—either as short-term or long-term variable rate debt obligations or as fixed-rate debt converted to variable rates through the use of interest rate swaps.
As of December 31, 2023 and 2022, approximately $8,253 million (26%) and $6,314 million (20%), respectively, of the principal amount of our debt balances were subject to variable interest rates—either as short-term or long-term variable-rate debt obligations or as fixed-rate debt converted to variable rates through the use of interest rate swaps.
Budgeting and approval of expansion capital expenditures are generally made periodically throughout the year on a project-by-project basis in response to specific investment opportunities identified by our business segments from which we generally expect to receive sufficient returns to justify the expenditures.
Budgeting and approval of expansion capital expenditures generally occurs periodically throughout the year on a project-by-project basis in response to specific investment opportunities identified by our business segments from which we generally expect to receive sufficient returns to justify the expenditures. Assets comprising expansion capital projects could result in additional sustaining capital expenditures over time.
Furthermore, we and almost all of our direct and indirect wholly owned domestic subsidiaries are parties to a cross guaranty wherein each party guarantees each other party’s debt. See “ —Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries .
Furthermore, we and almost all of our direct and indirect wholly owned domestic subsidiaries are parties to a cross guaranty wherein each party guarantees each other party’s debt.
Results of Operations Overview As described in further detail below, our management evaluates our performance primarily using the GAAP financial measures of Segment EBDA (as presented in Note 16, “Reportable Segments”) and Net income attributable to Kinder Morgan, Inc., along with the non-GAAP financial measures of Adjusted Earnings and DCF, both in the aggregate and per share for each, Adjusted Segment EBDA, Adjusted EBITDA and Net Debt.
Results of Operations Overview As described in further detail below, our management evaluates our performance primarily using Net income attributable to Kinder Morgan, Inc. and Segment earnings before DD&A expenses, including amortization of excess cost of equity investments, (EBDA) (as presented in Note 16 “Reportable Segments”) along with the non-GAAP financial measures of Adjusted Net income attributable to Common Stock, and distributable cash flow (DCF), both in the aggregate and per share for each, Adjusted Segment EBDA, Adjusted Net income attributable to Kinder Morgan, Inc., Adjusted earnings before interest, income taxes, DD&A expenses, including amortization of excess cost of equity investments, (EBITDA) and Net Debt.
Management compensates for the limitations of these non-GAAP financial measures by reviewing our comparable GAAP measures, understanding the differences between the measures and taking this information into account in its analysis and its decision making processes. 39 Certain Items Certain Items, as adjustments used to calculate our non-GAAP financial measures, are items that are required by GAAP to be reflected in Net income attributable to Kinder Morgan, Inc., but typically either (i) do not have a cash impact (for example, unsettled commodity hedges and asset impairments), or (ii) by their nature are separately identifiable from our normal business operations and in our view are likely to occur only sporadically (for example, certain legal settlements, enactment of new tax legislation and casualty losses).
Certain Items Certain Items, as adjustments used to calculate our non-GAAP financial measures, are items that are required by GAAP to be reflected in Net income attributable to Kinder Morgan, Inc., but typically either (i) do not have a cash impact (for example, unsettled commodity hedges and asset impairments), or (ii) by their nature are separately identifiable from our normal business operations and in most cases are likely to occur only sporadically (for example, certain legal settlements, enactment of new tax legislation and casualty losses).
Net Debt Net Debt is calculated, based on amounts as of December 31, 2022, by subtracting the following amounts from our total debt balance of $31,788 million: (i) cash and cash equivalents of $745 million; and (ii) debt fair value adjustments of $115 million; and excluding the foreign exchange impact on Euro-denominated bonds of $(8) million for which we have entered into currency swaps to convert that debt to U.S. dollars.
Net Debt Net Debt is calculated, based on amounts as of December 31, 2023, by subtracting the following amounts from our debt balance of $32,116 million: (i) cash and cash equivalents of $83 million; (ii) debt fair value adjustments of $187 million; and (iii) the foreign exchange impact on Euro-denominated bonds of $9 million f or which we have entered into currency swaps to convert that debt to U.S. dollars.
Adjusted Segment EBDA is used by management in its analysis of segment performance and management of our business. We believe Adjusted Segment EBDA is a useful performance metric because it provides management and external users of our financial statements additional insight into the ability of our segments to generate cash earnings on an ongoing basis.
We believe Adjusted Segment EBDA is a useful performance metric because it provides management, investors and other external users of our financial statements additional insight into performance trends across our business segments, our segments’ relative contributions to our consolidated performance and the ability of our segments to generate earnings on an ongoing basis.
In the table above, we report our interest expense as “net,” meaning that we have subtracted interest income and capitalized interest from our total interest expense to arrive at one interest amount.
Other Income (Expense) Interest, net In the table above, we report our interest expense as “net,” meaning that we have subtracted interest income and capitalized interest from our total interest expense to arrive at one interest amount. Our interest expense, ne t increa sed $284 million in 2023 compared to 2022.
GAAP Financial Measures The Consolidated Earnings Results for the years ended December 31, 2022 and 2021 present Segment EBDA and Net income attributable to Kinder Morgan, Inc., which are prepared and presented in accordance with GAAP.
GAAP Financial Measures The Consolidated Earnings Results for the years ended December 31, 2023 and 2022 present Net income attributable to Kinder Morgan, Inc., as prepared and presented in accordance with GAAP, and Segment EBDA, which is disclosed in Note 16 “Reportable Segments” pursuant to FASB ASC 280.
We do not expect to need to access the equity capital markets to fund our discretionary capital investments for the foreseeable future. See also “— Dividends and Stock Buy-back Program ” below for additional discussion related to our dividends and stock buy-back program. From time to time, we issue long-term debt securities, often referred to as senior notes.
See also “— Dividends and Stock Buy-back Program ” below for additional discussion related to our dividends and stock buy-back program. From time to time, we issue long-term debt securities, often referred to as senior notes.
See “—Segment Earnings Results” below. 2023 Dividends and Discretionary Capital We expect to declare dividends of $1.13 per share for 2023, a 2% increase from the 2022 declared dividends of $1.11 per share. We also expect to invest $2.1 billion in expansion projects and contributions to joint ventures, or discretionary capital expenditures during 2023.
CO 2 (Oil and Gas Producing activities) 2024 Dividends and Discretionary Capital We expect to declare dividends of $1.15 per share for 2024, a 2% increase from the 2023 declared dividends of $1.13 per share. We also expect to invest $2.3 billion in expansion projects and contributions to joint ventures, or discretionary capital expenditures, during 2024.
See “—Adjusted Segment EBDA to Adjusted EBITDA to DCF” and “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc.
(See the tables included in “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted Net Income Attributable to Kinder Morgan, Inc.,” “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to DCF” and “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted EBITDA” below).
For each of our assets, we budget for and make those sustaining capital expenditures that are necessary to maintain safe and efficient operations, meet customer needs and comply with our operating policies and applicable law. We may budget for and make additional sustaining capital expenditures that we expect to produce economic benefits such as increasing efficiency and/or lowering future expenses.
For each of our assets, we budget for and make those sustaining capital expenditures that are necessary to 60 maintain safe and efficient operations, meet customer needs and comply with our operating policies and applicable law.
Summarized combined balance sheet and income statement information for the Obligated Group follows: December 31, Summarized Combined Balance Sheet Information 2022 2021 (In millions) Current assets $ 3,514 $ 3,556 Current assets - affiliates 618 1,233 Noncurrent assets 61,523 61,754 Noncurrent assets - affiliates 516 508 Total Assets $ 66,171 $ 67,051 Current liabilities $ 6,612 $ 5,413 Current liabilities - affiliates 707 1,332 Noncurrent liabilities 30,668 32,310 Noncurrent liabilities - affiliates 1,096 1,047 Total Liabilities 39,083 40,102 Kinder Morgan, Inc.’s stockholders’ equity 27,088 26,949 Total Liabilities and Stockholders’ Equity $ 66,171 $ 67,051 Summarized Combined Income Statement Information Year Ended December 31, 2022 (In millions) Revenues $ 17,778 Operating income 3,611 Net income 2,175 64 Recent Accounting Pronouncements Please refer to Note 19 “Recent Accounting Pronouncements” to our consolidated financial statements for information concerning recent accounting pronouncements.
Summarized combined balance sheet and income statement information for the Obligated Group follows: December 31, Summarized Combined Balance Sheet Information 2023 2022 (In millions) Current assets $ 2,246 $ 3,514 Current assets - affiliates 760 618 Noncurrent assets 62,877 61,523 Noncurrent assets - affiliates 903 516 Total Assets $ 66,786 $ 66,171 Current liabilities $ 6,907 $ 6,612 Current liabilities - affiliates 734 707 Noncurrent liabilities 31,681 30,668 Noncurrent liabilities - affiliates 1,306 1,096 Total Liabilities 40,628 39,083 Kinder Morgan, Inc.’s stockholders’ equity 26,158 27,088 Total Liabilities and Stockholders’ Equity $ 66,786 $ 66,171 Summarized Combined Income Statement Information Year Ended December 31, 2023 (In millions) Revenues $ 14,131 Operating income 3,832 Net income 2,032 66 Recent Accounting Pronouncements Please refer to Note 19 “Recent Accounting Pronouncements” to our consolidated financial statements for information concerning recent accounting pronouncements.
We place no material restrictions on the ability to move cash between entities, payment of intercompany balances or the ability to upstream dividends to KMI other than restrictions that may be contained in agreements governing the indebtedness of those entities.
We place no material restrictions on the ability to move cash between entities, payment of intercompany balances or the ability to upstream dividends to KMI other than restrictions that may be contained in agreements governing the indebtedness of those entities. 59 Credit Ratings and Capital Market Liquidity We believe that our capital structure will continue to allow us to achieve our business objectives.
See “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted Earnings to DCF” and “—Non-GAAP Financial Measures—Adjusted Segment EBDA to Adjusted EBITDA to DCF” below. Adjusted Segment EBDA Adjusted Segment EBDA is calculated by adjusting Segment EBDA for Certain Items attributable to the segment.
See “—Non-GAAP Financial Measures—Reconciliation of Segment EBDA to Adjusted Segment EBDA” below. Adjusted EBITDA Adjusted EBITDA is calculated by adjusting Net income attributable to Kinder Morgan, Inc. for Certain Items and further for DD&A and amortization of excess cost of equity investments, income tax expense and interest.
Financing Activities $320 million less cash used in financing activities in the comparable years of 2022 and 2021 is explained by the following discussion. • $557 million of net proceeds received from the sale of a 25.5% ownership interest in ELC in 2022; and • a $197 million net decrease in cash used related to debt activity as a result of lower net debt payments in 2022 compared to 2021; partially offset by, • $368 million of cash used in 2022 for share repurchases under our share buy-back program. 62 Dividends and Stock Buy-back Program The table below reflects the declaration of dividends of $1.11 per share for 2022: Three months ended Total quarterly dividend per share for the period Date of declaration Date of record Date of dividend March 31, 2022 $0.2775 April 20, 2022 May 2, 2022 May 16, 2022 June 30, 2022 0.2775 July 20, 2022 August 1, 2022 August 15, 2022 September 30, 2022 0.2775 October 19, 2022 October 31, 2022 November 15, 2022 December 31, 2022 0.2775 January 18, 2023 January 31, 2023 February 15, 2023 We expect to continue to return additional value to our shareholders in 2023 through our previously announced dividend increase.
Net debt issuances in 2023 were primarily driven by the utilization of borrowings under our credit facility to fund the STX Midstream acquisition; partially offset by, • a decrease of $557 million in cash due to net proceeds received from the sale of a 25.5% ownership interest in ELC in 2022; and • a $154 million increase in cash used for share repurchases under our share buy-back program. 64 Dividends and Stock Buy-back Program The table below reflects the declaration of dividends of $1.13 per share for 2023: Three months ended Total quarterly dividend per share for the period Date of declaration Date of record Date of dividend March 31, 2023 $0.2825 April 19, 2023 May 1, 2023 May 15, 2023 June 30, 2023 0.2825 July 19, 2023 July 31, 2023 August 15, 2023 September 30, 2023 0.2825 October 18, 2023 October 31, 2023 November 15, 2023 December 31, 2023 0.2825 January 17, 2024 January 31, 2024 February 15, 2024 We expect to continue to return additional value to our shareholders in 2024 through our previously announced dividend increase.
Generally, we anticipate re-financing maturing long-term debt obligations in the debt capital markets and are therefore subject to certain market conditions which could result in higher costs or negatively affect our and/or our subsidiaries’ credit ratings. A decrease in our credit ratings could negatively impact our borrowing costs and could limit our access to capital.
We expect that our short-term liquidity needs will be met primarily through retained cash from operations or short-term borrowings. Generally, we anticipate re-financing maturing long-term debt obligations in the debt capital markets and are therefore subject to certain market conditions which could result in higher costs or negatively affect our and/or our subsidiaries’ credit ratings.
Circumstances may arise that lead to conflicts between using funds to pay anticipated dividends or to invest in our business. ” All of these matters will be taken into consideration by our board of directors when declaring dividends. Our dividends are not cumulative.
“ Risk Factors—Risks Related to Ownership of Our Capital Stock—The guidance we provide for our anticipated dividends is based on estimates. Circumstances may arise that lead to conflicts between using funds to pay anticipated dividends or to invest in our business. ” All of these matters will be taken into consideration by our Board when declaring dividends.
Nevertheless, actual results may differ significantly from our estimates, and any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. 37 For a summary of our significant accounting policies, see Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements and the following discussion for further information regarding critical estimates and assumptions used in the preparation of our financial statements.
Nevertheless, actual results may differ significantly from our estimates, and any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.
As of December 31, 2022 and 2021, the aggregate principal amount outstanding of our various long-term debt obligations (excluding current maturities) was $28,288 million and $29,772 million, respectively.
See “ —Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries .” As of December 31, 2023 and 2022, the aggregate principal amount outstanding of our various long-term debt obligations (excluding current maturities) was $27,880 million and $28,288 million, respectively.
DCF should not be used as an alternative to net cash provided by operating activities computed under GAAP. We believe the GAAP measure most directly comparable to DCF is Net income attributable to Kinder Morgan, Inc. DCF per share is DCF divided by average outstanding shares, including restricted stock awards that participate in dividends.
We believe the GAAP measure most directly comparable to DCF is Net income attributable to Kinder Morgan, Inc. DCF per share is DCF divided by average outstanding shares, including restricted stock awards that participate in dividends. See “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to DCF” below.
The overall $1,135 million unfavorable change from year-end 2021 was primarily due to (i) a $739 million increase in current debt, primarily related to senior notes that mature in the next twelve months; (ii) a $395 million decrease in cash and cash equivalents, which was used to repay a portion of senior notes that matured in the first quarter of 2022; and (iii) unfavorable net short-term fair value adjustments of $276 million on derivative contract assets and liabilities in 2022, offset partially by (i) a $156 million decrease in accrued contingencies; (ii) a $72 million increase in inventories, primarily products inventories; (iii) a $44 million net favorable change in our accounts receivables and payables, and (iv) a $42 million increase in restricted deposits.
The overall $1,552 million unfavorable change from year-end 2022 was primarily due to (i) a $664 million increase in current debt, primarily related to commercial paper borrowings used to fund our acquisition of STX Midstream; (ii) a $662 million decrease in cash and cash equivalents, resulting from using cash on hand as of December 31, 2022 to repay a portion of our senior notes that matured in the first quarter of 2023 partially offset by a decrease in current maturities of senior notes; (iii) a $174 million net unfavorable change in our accounts receivables and payables; (iv) a $109 million decrease in inventories, primarily products inventories; and (v) a $97 million decrease in other current assets, primarily in exchange gas receivables and regulatory assets; partially offset by favorable net short-term fair value adjustments of $155 million on derivative contract assets and liabilities in 2023.
On January 31, 2023, we issued in a registered offering $1.5 billion aggregate principal amount of 5.20% senior notes due 2033 for net proceeds of $1,485 million, which were used to repay short-term borrowings, maturing debt and for general corporate purposes. 57 Short-term Liquidity As of December 31, 2022, our principal sources of short-term liquidity are (i) cash from operations; and (ii) our combined $4.0 billion of credit facilities with an available capacity of approximately $3.9 billion and an associated $3.5 billion commercial paper program.
On January 31, 2023, we issued in a registered offering, $1,500 million aggregate principal amount of 5.20% senior notes due 2033 for net proceeds of $1,485 million, which were used to repay short-term borrowings, maturing debt and for general corporate purposes.
Below are the changes in Segment EBDA between 2022 and 2021: Year Ended December 31, 2022 versus Year Ended December 31, 2021 Segment EBDA 2022 2021 increase/(decrease) (In millions) Midstream $ 1,441 $ 442 $ 999 East 2,502 2,510 (8) West 858 863 (5) Total Natural Gas Pipelines $ 4,801 $ 3,815 $ 986 The changes in Segment EBDA for our Natural Gas Pipelines business segment in the comparable years of 2022 and 2021 are explained by the following discussion: • A $999 million (226%) increase in Midstream was affected by the following items for 2022 and 2021: (i) a pre-tax non-cash asset impairment loss of $1,600 million in the 2021 period related to our South Texas gathering and processing assets; (ii) an increase in expense in the 2021 period related to a certain litigation matter; and (iii) an increase in revenues 47 and costs of sales period over period related to the impacts of non-cash mark-to-market derivative contracts used to hedge forecasted commodity sales and purchases, all of which we treated as Certain Items.
Volumes for assets sold are excluded for all periods presented. 52 Below are the changes in Natural Gas Pipelines Segment EBDA: Year Ended December 31, 2023 2022 increase/(decrease) (In millions) Midstream $ 1,697 $ 1,441 $ 256 East 2,637 2,502 135 West 948 858 90 Total Natural Gas Pipelines $ 5,282 $ 4,801 $ 481 The changes in Natural Gas Pipelines Segment EBDA in the comparable years of 2023 and 2022 are explained by the following discussion: • The $256 million (18%) increase in Midstream was affected by decreases in revenues and costs of sales related to the mark-to-market impacts of non-cash unrealized derivative contracts used to hedge forecasted commodity sales and purchases, which we treated as Certain Items.
We believe it is useful to investors because it is a measure that management uses to allocate resources to our segments and assess each segment’s performance. We believe the GAAP measure most directly comparable to Adjusted Segment EBDA is Segment EBDA.
Adjusted Segment EBDA is also used as a factor in determining compensation under our annual incentive compensation program for our business segment presidents and other business segment employees. We believe it is useful to investors because it is a measure that management uses to allocate resources to our segments and assess each segment’s performance.
Additionally, as of December 31, 2022, we had borrowing capacity of approximately $3.9 billion under our credit facilities (discussed below in “ —Short-term Liquidity ”).
Liquidity and Capital Resources General As of December 31, 2023, we had $83 million of “Cash and cash equivalents,” a decrease of $662 million from December 31, 2022. Additionally, as of December 31, 2023, we had borrowing capacity of approximately $1.4 billion under our credit facility (discussed below in “ —Short-term Liquidity ”).
Below are the changes in Segment EBDA between 2022 and 2021: Year Ended December 31, 2022 versus Year Ended December 31, 2021 Segment EBDA 2022 2021 increase/(decrease) (In millions) West Coast Refined Products $ 511 $ 448 $ 63 Southeast Refined Products 265 258 7 Crude and Condensate 331 358 (27) Total Products Pipelines $ 1,107 $ 1,064 $ 43 The changes in Segment EBDA for our Products Pipelines business segment in the comparable years of 2022 and 2021 are explained by the following discussion: • A $63 million (14%) increase in West Coast Refined Products was affected by increased expenses in the 2021 period related to litigation and environmental reserve adjustments which we treated as Certain Items.
(c) Volumes include ethanol pipeline volumes. 54 Below are the changes in Products Pipelines Segment EBDA: Year Ended December 31, 2023 2022 increase/(decrease) (In millions) Crude and Condensate $ 265 $ 331 $ (66) Southeast Refined Products 278 265 13 West Coast Refined Products 519 511 8 Total Products Pipelines $ 1,062 $ 1,107 $ (45) The changes in Products Pipelines Segment EBDA in the comparable years of 2023 and 2022 are explained by the following discussion: • The $66 million (20%) decrease in Crude and Condensate was affected by a decrease of $67 million to equity earnings for a non-cash impairment related to our investment in Double Eagle Pipeline LLC, which we treated as a Certain Item.
In addition, Oil and Gas Producing activities Segment EBDA was favorably affected in 2022 and 2021 by changes in revenues related to non-cash mark-to-market derivative hedge contracts which we treated as Certain Items. • A $2 million (1%) increase in Source and Transportation activities primarily due to increased revenues of $51 million related to higher CO 2 sales prices partially offset by a 2021 settlement of $38 million for a terminated affiliate sales contract with Oil and Gas Producing activities and decreased revenues related to lower CO 2 sales volumes.
In addition, Oil and Gas Producing activities was affected by unfavorable changes in revenues related to the mark-to-market impacts of non-cash unrealized derivative hedge contracts, which we treated as Certain Items. • The $60 million (24%) decrease in Source and Transportation activities was primarily due to lower revenues related to lower CO 2 sales prices and volumes. • The $10 million (53%) increase in Energy Transition Ventures activities was primarily driven by three additional plants placed into service during 2023 leading to higher RNG margins as a result of higher volumes, partially offset by higher operating expenses.
Investing Activities $130 million less cash used in investing activities in the comparable years of 2022 and 2021 is explained by the following discussion. • a $1,060 million decrease in expenditures for the acquisition of assets and investments, net of cash acquired, primarily driven by a combined $487 million of net cash used for our acquisitions of Mas Ranger, LLC and NANR in 2022, compared with a combined $1,538 million of net cash used for the acquisitions of Stagecoach and Kinetrex in 2021; See Note 3 “Acquisitions and Divestitures” to our consolidated financial statements for further information regarding these two acquisitions; partially offset by, • a $400 million decrease in proceeds from sales of property, plant and equipment, investments, and other assets, net of removal costs primarily due to $412 million received from the sale of a partial interest in our equity investment in NGPL Holdings in 2021; • a $340 million increase in capital expenditures reflecting an overall increase of expansion capital projects for most of our business segments in 2022 over the comparative 2021 period; and • a $191 million increase in cash used for contributions to equity investees driven primarily by higher contributions in 2022 compared with 2021 to SNG associated with a debt payment.
Investing Activities $2,000 million more cash used in investing activities in the comparable years of 2023 and 2022 is explained by the following discussion. • a $1,355 million increase in expenditures for the acquisition of assets and investments, net of cash acquired, primarily driven by $1,829 million of net cash used for the acquisition of STX Midstream in 2023, compared with a combined $487 million of net cash used for our acquisitions of Mas Ranger, LLC and NANR in 2022; See Note 3 “Acquisitions and Divestitures” to our consolidated financial statements for further information regarding these acquisitions; and • a $696 million increase in capital expenditures primarily driven by the expansion projects in our Natural Gas Pipelines and Terminals business segments, partially offset by a decrease in expansion projects in our Products Pipelines business segment.
For additional information about our outstanding senior notes and debt-related transactions in 2022, see Note 9 “Debt” to our consolidated financial statements. For information about our interest rate risk, see Item 7A.
The December 31, 2023 amount includes $1,989 million of commercial paper notes. The percentage at December 31, 2022 includes $1,250 million of variable-to-fixed interest rate derivative contracts which expired in December 2023. For additional information about our outstanding senior notes and debt-related transactions in 2023, see Note 9 “Debt” to our consolidated financial statements.
Payments due by period Total Less than 1 year 1-3 years 3-5 years More than 5 years (In millions) Contractual obligations: Debt borrowings-principal payments(a) $ 31,673 $ 3,385 $ 3,491 $ 1,992 $ 22,805 Interest payments(b) 21,234 1,616 2,900 2,689 14,029 Lease obligations(c) 375 58 90 61 166 Pension and OPEB plans(d) 469 50 31 32 356 Transportation, volume and storage agreements(e) 661 157 267 131 106 Other obligations(f) 341 90 105 38 108 Total $ 54,753 $ 5,356 $ 6,884 $ 4,943 $ 37,570 Other commercial commitments: Standby letters of credit(g) $ 153 $ 81 $ 72 Capital expenditures(h) $ 527 $ 527 (a) See Note 9 “Debt” to our consolidated financial statements.
Payments due by period Total Less than 1 year 1-3 years 3-5 years More than 5 years (In millions) Contractual obligations: Debt borrowings-principal payments(a) $ 31,929 $ 4,049 $ 2,668 $ 2,773 $ 22,439 Interest payments(b) 20,362 1,573 2,933 2,717 13,139 Lease obligations(c) 366 67 96 58 145 Pension and OPEB plans(d) 457 64 28 25 340 Transportation, volume and storage agreements(e) 660 158 266 116 120 Other obligations(f) 297 84 81 31 101 Total $ 54,071 $ 5,995 $ 6,072 $ 5,720 $ 36,284 Other commercial commitments: Standby letters of credit(g) $ 157 $ 85 $ 72 Capital expenditures(h) $ 469 $ 469 (a) See Note 9 “Debt” to our consolidated financial statements.
Adjusted EBITDA is used by management and external users, in conjunction with our Net Debt (as described further below), to evaluate our leverage. Therefore, we believe Adjusted EBITDA is useful to investors. We believe the GAAP measure most directly comparable to Adjusted EBITDA is Net income attributable to Kinder Morgan, Inc.
We also include amounts from joint ventures for income taxes and DD&A (see “Amounts from Joint Ventures” below). Adjusted EBITDA is used by management, investors and other external users, in conjunction with our Net Debt (as described further below), to evaluate our leverage.
The increase in interest expense was further impacted by (i) non-cash differences between the change in fair value of interest rate swaps not designated as accounting hedges and the change in fair value of hedged debt, primarily related to our floating-to-fixed LIBOR/SOFR interest rate swaps, and (ii) non-cash debt fair value adjustments associated with acquisitions, both of which were treated by us as Certain Items We use interest rate swap agreements to convert a portion of the underlying cash flows related to our long-term fixed rate debt securities (senior notes) into variable rate debt in order to achieve our desired mix of fixed and variable rate debt.
We use interest rate swap agreements to convert a portion of the underlying cash flows related to our long-term fixed rate debt securities (senior notes) into variable rate debt in order to achieve our desired mix of fixed and variable rate debt.
DCF is a significant performance measure useful to management and external users of our financial statements in evaluating our performance and in measuring and estimating the ability of our assets to generate cash earnings after servicing our debt, paying cash taxes and expending sustaining capital, that could be used for discretionary purposes such as dividends, stock repurchases, retirement of debt, or expansion capital expenditures.
DCF is a significant performance measure used by us, investors and other external users of our financial statements to evaluate our performance and to measure and estimate the ability of our assets to generate economic earnings after paying interest expense, paying cash taxes and expending sustaining capital.
(b) Amounts are associated with our Citrus, NGPL and Products (SE) Pipe Line equity investments. 46 Segment Earnings Results Natural Gas Pipelines Year Ended December 31, 2022 2021 (In millions, except operating statistics) Revenues $ 12,686 $ 11,709 Operating expenses (8,562) (7,000) Gain (loss) on divestitures and impairments, net 10 (1,599) Other income 3 2 Earnings from equity investments 683 487 Other, net (19) 216 Segment EBDA 4,801 3,815 Certain Items(a) 141 1,648 Adjusted Segment EBDA $ 4,942 $ 5,463 Change from prior period Increase/(Decrease) Segment EBDA $ 986 Adjusted Segment EBDA $ (521) Volumetric data(b) Transport volumes (BBtu/d) 39,064 38,577 Sales volumes (BBtu/d) 2,482 2,473 Gathering volumes (BBtu/d) 3,046 2,749 NGLs (MBbl/d) 30 29 (a) For more detail of these Certain Items, see the discussion of changes in Segment EBDA below.
(b) See “ —Overview—Non-GAAP Financial Measures— Certain Items” above. 51 Segment Earnings Results Natural Gas Pipelines Year Ended December 31, 2023 2022 (In millions, except operating statistics) Revenues $ 9,168 $ 12,686 Costs of sales (3,258) (7,171) Other operating expenses (1,442) (1,391) Gain on divestitures and impairments, net 10 10 Other income 2 3 Earnings from equity investments 776 683 Other, net 26 (19) Segment EBDA 5,282 4,801 Certain Items: Legal, environmental and other reserves — 51 Change in fair value of derivative contracts (122) 64 Other — 26 Certain Items(a) (122) 141 Adjusted Segment EBDA $ 5,160 $ 4,942 Change from prior period Increase/(Decrease) Segment EBDA $ 481 Adjusted Segment EBDA $ 218 Volumetric data(b) Transport volumes (BBtu/d) 40,282 38,657 Sales volumes (BBtu/d) 2,346 2,482 Gathering volumes (BBtu/d) 3,562 2,994 NGLs (MBbl/d) 34 30 (a) See table included in “ —Overview—Non-GAAP Financial Measures— Certain Items” above. 2023 and 2022 Certain Items of (i) $(122) million and $63 million, respectively, are associated with our Midstream business; (ii) none and $1 million, respectively, are associated with our East business; and (iii) none and $77 million, respectively, are associated with our West business.
Year Ended December 31, 2022 2021 Changes (In millions) Net Cash Provided by (Used in) Operating activities $ 4,967 $ 5,708 $ (741) Investing activities (2,175) (2,305) 130 Financing activities (3,145) (3,465) 320 Net Decrease in Cash, Cash Equivalents and Restricted Deposits $ (353) $ (62) $ (291) Operating Activities $741 million less cash provided by operating activities in the comparable years of 2022 and 2021 is explained by the following discussion. • a $502 million decrease in cash after adjusting the $775 million increase in net income by $1,277 million for the combined effects of the period-to-period net changes in non-cash items.
Year Ended December 31, 2023 2022 Changes (In millions) Net Cash Provided by (Used in) Operating activities $ 6,491 $ 4,967 $ 1,524 Investing activities (4,175) (2,175) (2,000) Financing activities (3,014) (3,145) 131 Net Decrease in Cash, Cash Equivalents and Restricted Deposits $ (698) $ (353) $ (345) Operating Activities $1,524 million more cash provided by operating activities in the comparable years of 2023 and 2022 is explained by the following discussion. • an $894 million increase in cash related to changes in deferred revenues primarily driven by an $843 million prepayment received for certain fixed reservation charges under long-term transportation and terminaling contracts in the 2023 period.
Adjusted Earnings is used by us and certain external users of our financial statements to assess the earnings of our business excluding Certain Items as another reflection of our ability to generate earnings. We believe the GAAP measure most directly comparable to Adjusted Earnings is Net income attributable to Kinder Morgan, Inc.
We believe the GAAP measure most directly comparable to Adjusted Net Income Attributable to Kinder Morgan, Inc. is Net income attributable to Kinder Morgan, Inc.
As of December 31, 2022, our short-term corporate debt ratings were A-2, Prime-2 and F2 at Standard and Poor’s, Moody’s Investor Services and Fitch Ratings, Inc., respectively. The following table represents KMI’s and KMP’s senior unsecured debt ratings as of December 31, 2022.
A decrease in our credit ratings could negatively impact our borrowing costs and could limit our access to capital. The following table represents our debt ratings as of December 31, 2023. Rating agency Short-term rating Long-term rating Outlook Standard and Poor’s A-2 BBB Stable Moody’s Investor Services Prime-2 Baa2 Stable Fitch Ratings, Inc.
(GAAP) $ 2,548 $ 1,784 Certain Items: Fair value amortization (15) (19) Legal, environmental and other reserves 51 160 Change in fair value of derivative contracts(a) 57 19 Loss on impairments, divestitures and other write-downs, net(b) — 1,535 Income tax Certain Items (37) (491) Other 32 16 Total Certain Items(c) 88 1,220 DD&A and amortization of excess cost of equity investments 2,261 2,213 Income tax expense(d) 747 860 Joint venture DD&A and income tax expense(d)(e) 348 351 Interest, net(d) 1,524 1,518 Adjusted EBITDA $ 7,516 $ 7,946 (a) Gains or losses are reflected in our DCF when realized.
Year Ended December 31, 2023 2022 Certain Items Fair value amortization $ — $ (15) Legal, environmental and other reserves — 51 Change in fair value of derivative contracts(a) (126) 57 Loss on impairment 67 — Income tax Certain Items(b) 33 (37) Other(c) 45 32 Total Certain Items(d)(e) $ 19 $ 88 (a) Gains or losses are reflected when realized.
Below are the changes in Segment EBDA between 2022 and 2021: Year Ended December 31, 2022 versus Year Ended December 31, 2021 Segment EBDA 2022 2021 increase/(decrease) (In millions) Oil and Gas Producing activities $ 553 $ 507 $ 46 Source and Transportation activities 247 245 2 Subtotal 800 752 48 Energy Transition Ventures 19 8 11 Total CO 2 $ 819 $ 760 $ 59 The changes in Segment EBDA for our CO 2 business segment in the comparable years of 2022 and 2021 are explained by the following discussion: • A $46 million (9%) increase in Oil and Gas Producing activities primarily due to higher realized crude oil and NGL prices which increased revenues by $203 million, a 2021 settlement of $38 million for a terminated affiliate purchase contract with Source and Transportation activities partially offset by higher operating expenses of $186 million mainly 54 driven by the benefit realized in the 2021 period from returning power to the grid by curtailing oil production during the February 2021 winter storm.
(d) Net of royalties and outside working interests. 57 Below are the changes in CO 2 Segment EBDA: Year Ended December 31, 2023 2022 increase/(decrease) (In millions) Oil and Gas Producing activities $ 473 $ 553 $ (80) Source and Transportation activities 187 247 (60) Subtotal 660 800 (140) Energy Transition Ventures activities 29 19 10 Total CO 2 $ 689 $ 819 $ (130) The changes in CO 2 Segment EBDA in the comparable years of 2023 and 2022 are explained by the following discussion: • The $80 million (14%) decrease in Oil and Gas Producing activities was impacted by decreases in revenues related to lower realized NGL prices and lower volumes, lower crude oil volumes and higher operating expenses partially offset by higher realized crude oil prices.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBelow are our debt balances, including debt fair value adjustments, and sensitivity to interest rates: December 31, 2022 December 31, 2021 Carrying value Estimated fair value(a) Carrying value Estimated fair value(a) (In millions) Fixed rate debt(b) $ 31,474 $ 29,756 $ 33,006 $ 37,459 Variable rate debt $ 314 $ 314 $ 314 $ 316 Notional principal amount of variable-to-fixed interest rate swap agreements(c) (1,500) (490) Notional principal amount of fixed-to-variable interest rate swap agreements 7,500 7,100 Debt balances subject to variable interest rates(d) $ 6,314 $ 6,924 (a) Fair values were determined using Level 2 inputs.
Biggest changeBelow are our debt balances, including debt fair value adjustments, and sensitivity to interest rates: December 31, 2023 December 31, 2022 Carrying value Estimated fair value(a) Carrying value Estimated fair value(a) (In millions) Fixed rate debt(b) $ 30,063 $ 29,317 $ 31,474 $ 29,756 Variable rate debt $ 2,053 $ 2,053 $ 314 $ 314 Notional principal amount of variable-to-fixed interest rate swap agreements(c) — (1,500) Notional principal amount of fixed-to-variable interest rate swap agreements 6,200 7,500 Debt balances subject to variable interest rates(d) $ 8,253 $ 6,314 (a) Fair values were determined using Level 2 inputs.
For more information on our interest rate risk management and on our interest rate swap agreements, see Note 14 “Risk Management” to our consolidated financial statements. 66 Foreign Currency Risk As of December 31, 2022, we had a notional principal amount of $543 million of cross-currency swap agreements that effectively convert all of our fixed-rate Euro denominated debt, including annual interest payments and the payment of principal at maturity, to U.S. dollar denominated debt at fixed rates.
For more information on our interest rate risk management and on our interest rate swap agreements, see Note 14 “Risk Management” to our consolidated financial statements. 68 Foreign Currency Risk As of December 31, 2023, we had a notional principal amount of $543 million of cross-currency swap agreements that effectively convert all of our fixed-rate Euro denominated debt, including annual interest payments and the payment of principal at maturity, to U.S. dollar denominated debt at fixed rates.
(d) A hypothetical 10% change in the weighted average interest rate on all of our borrowings (approximately 48 and 47 basis points, respectively, in 2022 and 2021) when applied to our outstanding balance of variable rate debt as of December 31, 2022 and 2021, including adjustments for the notional swap amounts described in the table above, would result in changes of approximately $30 million and $32 million.
(d) A hypothetical 10% change in the weighted average interest rate on all of our borrowings (approximately 58 and 48 basis points in 2023 and 2022, respectively) when applied to our outstanding balance of variable rate debt as of December 31, 2023 and 2022, including adjustments for the notional swap amounts described in the table above, would result in changes of approximately $48 million and $30 million, respectively.
As of December 31, 2022, including debt converted to variable rates through the use of interest rate swaps but excluding our debt fair value adjustments, approximately 20% of our debt balances were subject to variable interest rates.
As of December 31, 2023, including debt converted to variable rates through the use of interest rate swaps but excluding our debt fair value adjustments, approximately 26% of our debt balances were subject to variable interest rates.
These swaps eliminate the foreign currency risk associated with our foreign currency denominated debt. 67
These swaps eliminate the foreign currency risk associated with our foreign currency denominated debt. 69
A hypothetical 10% movement in the underlying commodity prices would have the following effect on the associated derivative contracts’ estimated fair value: As of December 31, Commodity derivative 2022 2021 (In millions) Crude oil $ 157 $ 135 Natural gas 49 36 NGL 5 8 Total $ 211 $ 179 Our sensitivity analysis represents an estimate of the reasonably possible gains and losses that would be recognized on the crude oil, natural gas and NGL portfolios of derivative contracts assuming hypothetical movements in future market rates and is 65 not necessarily indicative of actual results that may occur.
A hypothetical 10% movement in the underlying commodity prices would have the following effect on the associated derivative contracts’ estimated fair value: As of December 31, Commodity derivative 2023 2022 (In millions) Crude oil $ 127 $ 157 Natural gas 28 49 NGL 4 5 Total $ 159 $ 211 Our sensitivity analysis represents an estimate of the reasonably possible gains and losses that would be recognized on the crude oil, natural gas and NGL portfolios of derivative contracts assuming hypothetical movements in future market rates and is 67 not necessarily indicative of actual results that may occur.
(b) A hypothetical 10% change in the average interest rates applicable to such debt as of December 31, 2022 and 2021, would result in changes of approximately $1,882 million and $1,614 million, respectively, in the estimated fair values of these instruments. (c) December 31, 2022 amount includes $1.25 billion of variable-to-fixed interest rate swap agreements that expire in December 2023.
(b) A hypothetical 10% change in the average interest rates applicable to such debt as of December 31, 2023 and 2022, would result in changes of approximately $1,889 million and $1,882 million, respectively, in the estimated fair values of these instruments. (c) December 31, 2022 amount includes $1.25 billion that expired in December 2023.
Removed
December 31, 2021 amount excludes $4.9 billion of variable-to-fixed interest rate swap agreements that became effective January 4, 2022 and expired December 31, 2022.

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